Accounting for Merchandising Businesses: Advanced Topics

1. Explain how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements.

2. Demonstrate the computational procedures for FIFO, LIFO, and weighted average.

3. Apply the lower-of-cost-or-market rule to inventory valuation.

4. Explain how fraud can be avoided through inventory control.

5. Use the gross margin method to estimate ending inventory.

6. Explain the importance of inventory turnover to a company’s profitability.

7. Explain how accounting for investment securities differs when the securities are classified as held to maturity, trading, or available for sale. (Appendix)