Inventory Accounting and Costing Course

Accounting, Finance and Budgeting Training

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Inventory Accounting and Costing Course

Course Overview:

The Inventory Accounting and Costing Course will explain in detail, the concepts of inventory costing, inventory accounting and inventory management.

At the conclusion of the training, the participants will be able to differentiate and control for the various categories of inventories, execute appropriate inventory systems (periodic vs perpetual), and explain the nature of inventory valuation a GAAP and IFRS.

The implementation of the course will be able to explain important concepts about inventory lowering, some factors affecting accounting policies, and other concepts such as inventory cost methods (FIFO - LIFO – weighted costs average).

They will learn how to estimate the ending inventory, determine net realizable value, and utilize various cost accounting systems including, traditional and activity-based cost accounting. Inventory evaluation and report generation in the course of the training will employ the use of Excel and pivot tables.

This is a very useful course for professionals handling inventories, financial controllers, managers of warehouses, and those involved in the management and accounting of stocks.

Course Objectives:

By the end of the Inventory Accounting and Costing Course, you will:

Identify the types of inventories and recognize the timing of inventory ownership.
Specify the situations in which the periodic inventory system should be used, and how the perpetual system can be enhanced.
Identify the situations that can cause incorrect inventory transactions.
Recognize the activities needed to establish a system of inventory record keeping, and how such a system may be rendered less accurate.
Estimate ending inventory using the retail method.
Recognize and correctly measure inventory under International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP)
Explain the proper use of write-downs, write backs, and impact of change in inventory accounting policies on financial statements
Apply professional judgment in accounting for inventory not on hand
Categorize different inventory cost flow assumptions and describe how they affect the company’s financial position and income statement
Outline the various approaches for cost accounting
Use Excel and pivot table tools and techniques to analyze inventory and calculate weighted average costs

Who Should Attend?

This Inventory Accounting and Costing Course is ideal for:

Inventory professionals, including supervisors, account managers, purchasing and facility supervisors and coordinators, financial controllers, new employees handling inventory, internal auditors, warehouse assistants and managers, and operations managers.

Course Outlines:

Introduction to inventory

Current assets and inventory management
The four reasons for keeping inventory
Inventory cycle from purchases to sales:
Ordering and receiving
Sales and delivery
Best practices in the count process
Inventory industry types: merchandise, manufacturing, construction, and real estate
Differences between inventory, fixed assets, and investment properties
Understanding and analyzing inventory ratios

Accounting for Inventory

Perpetual versus periodic inventory methods
Cost accounting versus financial accounting
Cost allocation techniques:
Direct material, direct labor, and manufacturing overhead
Initial recognition
Cost of purchase, cost of conversion, and treatment of discounts and rebates received
Measurement after recognition
Calculating ‘net realizable value’ (IFRS)
Calculating market price under the Lower of Cost or Market (LCM) method (GAAP)
Estimating and booking write-downs for slow-moving and obsolete inventory
Accounting for write-backs of impairment under IFRS and GAAP
Accounting for errors identified in the physical count

Accounting for Inventory: Special Topics

Accounting for inventory not on hand
On consignment
Goods in-transit: defining incoterms
Sold with right of return
Sold subject to installation and inspection
Sold on a ‘bill and hold’ basis
The concept of ‘inventory credit’: inventory used as collateral to raise finance
Impact of Accounting Policies Changes on Financial Statements
Inventory required disclosures