FAR Module 10
Card Set Information
FAR Module 10
CPA Exam FAR
Considers both varialbe and fixed manufacturing costs as product costs.
Which is net realizable value (selling price less selling costs and costs to complete).
Recognition of contract revenue and profit at contract completion.
Direct (variable) Costing
Considers only variable costs as product costs and fixed production costs as period costs.
LIFO applied to pools of inventory items rather than to individual items.
First-In, First-Out (FIFO)
The goods from beginning inventory and the earlies purchases are assumed to be the goods sold first.
Whis is net realizable value less normal profit.
Title passes to the buyer when the goods are received at their final destination.
FOB Shipping Point
Title passes to the buyer when the carrier receives the goods.
Any subsequent discount taken is shown as purchase discount which is netted against the purchsaes account in determining cost of goods sold.
Measures the number of times inventory was sold and reflects inventory order and investment policies.
Last-In, First-Out (LIFO)
The most recent purchases are assumed to be the first goods sold, thus, ending inventory is assumed to be composed of the oldest goods.
LIFO conformity rule
If LIFO is used for tax purposes, it must be used for financial reportng purposes.
The account used to reduce inventory from internal valuation to the LIFO valuation.
The average cost of goods on hand must be recalculated any time additional inveontory is purchased at a unit cost differnt from the previously calculated average cost of goods on hand.
Any purchase discounts offered are assumed taken and the purchase account reflects the net price.
Number of Days' Supply in Average Inventory
Number of days inventory is held before sale; reflects on efficiency of inventory policies.
Recognition of contract revenue and porfit during construction based on expected total profit and estimated progress toward completion in the current period.
Inventory is counted periodically and then priced.
A running total is kept of the units on hand (and possibly their value) by recording all increases and decreases as they occur.
Result from legally enforceable contracts to purchase specific quantities of goods at fixed prices in the future.
The seller does not weight the average for units purchased or in beginning inventory.
The seller determines which item is sold.
Predetermined costs in a cost accounting system, generally used for control purposes.
These are discounts that are allowed tothe entity because of its being a wholesaler, a good customer, or merely the fact that the item is on sale at a reduced price.
The seller averages the cost of all items on hand and purchased during the period. The units in ending inventory and units sold (COGS) are costed at this average cost.