ACC E272 Lecture Notes - Lecture 9: Financial Statement, European Cooperation In Science And Technology, Historical Cost
Document Summary
It generally relies on past percentages in determining the markup. Care must be exercised when applying a blanket gross profit rate when there are. Gaap requires a varying gross profits physical inventory as additional verification. Accounting standards require financial statement disclosure of the composition of the inventory, inventory financing arrangements, and the inventory costing methods employed. The standards also require the consistent application of costing methods from one period to another. Inventory composition either in the balance sheet or in a separate schedule in the notes. Inventory management is like a double edged sword. Management wants to stock a great variety and quantity of items to provide customers with great selection, but it may increase carrying costs with investment, storage, insurance, taxes, damage etc. Inventory turnover- measures the number of times on average a company sells the inventory during the period; cost of goods sold/ average inventory.
