Inventory Accounting

INVENTORY

Only when beer bill is delivered is revenue recognized.

BB+Purchases-EB=COGS

COGS lifo is typically higher because purchase prices typically increase over time.

Why would companies use lifo?

Pay lower taxes.

*However, companies must use lifo for accounting purposes

gross inventories - lifo reserve = lifo inventory

what causes a decrease in lifo reserve from one year to another?

-lifo liquidation( sell more units than we purchased)

-input prices were cheaper than historical prices.

When we say what is COGS under lifo,“cost of products sold” in income statement is actually a mix of lifo

The money that you save under lifo (if prices are increasing) is:

Tax rate * Δlifo reserve

I’ve read about our lack of professionalism, our inability to hold a meaningful conversation without tapping away on our iPhones, and our entitled attitudes—Ha! As if any older generation didn’t have bad things to say about the youth…

Pew Research Center reminded me that Millennials are the first in the modern era “to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income than their two immediate predecessor generations had at the same stage of their life cycles.” I get the picture.