Accounting All-in-One For Dummies

Chapter 2

Exploring Inventory Cost Flow Assumptions

In This Chapter

Seeing how inventory calculations impact financial statements

Comparing service companies and manufacturers

Recognizing a variety of inventory types

Sampling inventory valuation methods

Looking at an inventory worksheet

Some people think that inventory is only the merchandise available for sale in a store, commonly called retail or merchandise inventory. This chapter covers retail inventory, but it also introduces you to other kinds of product inventory used by manufacturers, including direct materials, work in process, and finished goods.

You also find out in this chapter about two methods a company may use to keep track of merchandise inventory, as well as the four methods businesses may use to value ending inventory: specific identification; weighted average; last-in, first-out; and first-in, first-out.

Some businesses, such as service companies, may not carry any inventory. Although they may carry a minimal amount ...