1) Identify accounting principles and controls related to merchandise inventory
a) Consistency Principle
b) Disclosure Principle
c) Materiality Concept
d) Accounting Conservatism
e) Controls over Merchandise Inventory
2) Account for merchandise inventory costs under a perpetual inventory system
a) Ending Merchandise Inventory
b) Cost of Goods Sold
c) Specific Identification Method
d) Exhibit 6-3 Perpetual Inventory Record: Specific Identification
e) First-In, First-Out (FIFO) Method
f) Exhibit 6-4 Perpetual Inventory Record: First-In, First-Out (FIFO)
g) Last-In, First-Out (LIFO) Method
h) Exhibit 6-5 Perpetual Inventory Record: Last-In, First-Out (LIFO)
i) Weighted-Average Method
j) Exhibit 6-6 Perpetual Inventory Record: Weighted-Average
3) Compare the effects on the financial statements when using the different inventory costing methods
a) Income Statement
i. Exhibit 6-7 Comparative Results for Specific Identification, FIFO, LIFO, and Weighted-Average- Income Statement
b) Balance Sheet
i. Exhibit 6-8 Comparative Results for FIFO, LIFO, and Weighted-Average- Balance Sheet
c) Exhibit 6-9 Effects on the Financial Statements During Periods of Rising and Declining Inventory Costs
4) Apply the lower-of-cost-or-market rule to merchandise inventory
5) Measure the effects of merchandise inventory errors on the financial statements
a) Exhibit 6-10 Inventory Errors
b) Exhibit 6-11 Effects of Inventory Errors
6) Use inventory turnover and days’ sales in inventory to evaluate business performance
a) Inventory Turnover
b) Days’ Sales in Inventory
7) Account for merchandise inventory costs under a periodic inventory system (Appendix 6A)
a) Inventory Costing in the Periodic System
b) First-In, First-Out (FIFO) Method
c) Last-In, First-Out (LIFO) Method
d) Weighted-Average Method
e) Comparing the Perpetual and Periodic Inventory Systems
