About This Chapter
Below is a sample breakdown of the Merchandising Operations and Inventory in Accounting chapter into a 5-day school week. Based on the pace of your course, you may need to adapt the lesson plan to fit your needs.
|Day||Topics||Key Terms and Concepts Covered|
|Monday||Definition, activities and income components of a merchandising company, along with items that make up merchandise inventory, methods and types of inventory cost and an explanation of accounting for inventory purchases||Inventory systems and other components of merchandising companies; kinds of inventory, including goods in consignment or goods in transit; how much it costs to stock inventory; transportation fees, purchase discounts and more|
|Tuesday||Perpetual and periodic inventory systems; accounting for inventory sales|| The contrasts between the two systems; |
Keeping records of all sales with the perpetual system; kinds of sales, including those made on credit
|Wednesday||Recording sales with the perpetual system; reconciling the bank account; methods of inventory counting||Keeping track of sales with the perpetual system; making sure account balances reflect sales and purchases, strategies for physically adding up the inventory|
|Thursday||Inventory valuation methods; investment management and financial reporting||Techniques for tracking and computing the items in inventory; methods for monitoring purchases and assessing inventory levels; using the perpetual method for financial reporting|
|Friday||Effects of inventory errors; net realizable value and the lower of cost or market of inventory||How inventory mistakes might affect financial statements; calculating the net realizable value (NRV) and recognizing the differences between a profit and the NRV; techniques for assessing the lower of cost or market value|
1. Merchandising Company: Definition, Activities & Income Components
Do you know what a merchandising company is? If you said it's a store, you are right. It is a store, but it is also so much more. In this lesson, we are going to discuss some of the major components of a merchandising company.
2. Items that Make Up Merchandise Inventory
In order to operate, merchandising companies must carry inventory. What exactly makes up merchandise inventory? In this lesson, you will not only learn the answer to that question, but also several other important factors that relate to merchandise inventory.
3. Inventory Cost: Definition, Methods & Types
Have you ever thought about how much it costs a business to keep inventory in stock? It's not just the price the business pays for the items that it keeps in stock. It is so much more. In this lesson, we will discuss exactly what constitutes actual inventory cost.
4. Accounting for Inventory Purchases
A merchandising company must purchase inventory, and it has to be accounted for in the accounting records. In this lesson, you will learn how to calculate inventory purchase amounts as well as how to record them in the accounting journals.
5. Perpetual and Periodic Inventory Systems
Inventory management is an important part of business success. In this lesson, we will discuss the two types of inventory systems used in accounting today.
6. Recording Purchases Using the Perpetual System
Every transaction that occurs in a business, whether it is a purchase or a sale, must be accounted for. In this lesson, you will learn how to record purchases using the perpetual inventory system.
7. Accounting for Inventory Sales
In order to operate, a business must make sales. In this lesson, we are going to discuss sales of inventory. You will learn the types of sales made, the items that affect sales profit, and the way to record sales in the accounting records.
8. Recording Sales Using the Perpetual System
Each transaction that occurs in a business has an impact on at least two or more accounts. Because of that, recording transactions is essential. In this lesson, you will learn about recording sales transactions using the perpetual inventory system.
9. Reconciling the Bank Account After Purchases or Sales
Even if your accounting skills are top notch, you still should make sure that the books have been reconciled with the bank account in question. This lesson explains why.
10. Inventory Counting: Process & Methods
It is important for any business to know how much and what types of items that they have available to sell. In this lesson, you will learn what inventory is, how to count it, and why it is important.
11. Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average
This lesson introduces you to the cost flow assumption methods of specific identification: FIFO, LIFO, and weighted average. You will also learn how to compute inventory in a perpetual system using the methods of FIFO, LIFO, and weighted average.
12. The Importance of Evaluating Investment Management
Whether you're an individual or the financial manager of a company, the ability to evaluate your investment managers is a valuable skill in order to make sure that you are investing as much as possible.
13. The Effects of Financial Statements on Costing Methods
The way you calculate the cost of your inventory can change the profit you show on your financial statement. Learn how one method can show higher profits, while the other method can give you tax benefits.
14. The Effects of Inventory Errors
For companies, a miscount of inventory can be a serious issue. In this lesson we'll look at the effects of inventory errors on companies, both with respect to profits and how the error should be recorded.
15. Net Realizable Value of Inventory: Definition & Method
Calculating inventory value is essential for correct reporting in accounting records. In this lesson, we are going to discuss what net realizable value is and why it plays an important role in inventory valuation.
16. The Lower of Cost or Market of Inventory: Definition & Method
No matter what kind of inventory a company has, that inventory has value. In this lesson, we'll talk about valuing inventory using the lower of cost or market rule.
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Other chapters within the Financial Accounting Syllabus Resource & Lesson Plans course
- Introduction to Accounting Lesson Plans
- Financial Statements in Accounting Lesson Plans
- Mechanics of the Accounting Cycle Lesson Plans
- Adjusting Accounts and Preparing Financial Statements Lesson Plans
- Internal Controls in Accounting Lesson Plans
- Receivables in Accounting Lesson Plans
- Current and Long-Term Liabilities in Accounting Lesson Plans