Tóm tắt nội dung kiến thức chương 4: + Income Statement The income statement is part of the double entry bookkeeping system, whereas the balance sheet is not. However it is presented, the income statements is simply another "T" account or ledger account + Inventory account The balance on the inventory account remains at the end of the period and is listed in the balance sheet under current assets as inventory. - Any balance carried down at the end of an accounting period should be included on the balance sheet - Any balance carried down at the end of an accounting period, the closing balance on an account, will become the opening balance thereon at the beginning of the next accounting period. - It becomes the brought down balance. The inventory shown on the trial balance is last year's inventory. + Financial statements Adherence to double entry bookkeeping principles is always necessary in the preparation of financial Statement. + Valuation of Inventory The valuation of inventory is governed by IAS 2 Inventory The prudence concept required losses to be accounted for as soon as they are anticipated. The account at which inventory should be stated in the balance sheets is the lower of cost and net realisable value. The method of inventory valuation chosen should be adhered to from one period to the next, so as to give a meaningful trend of trading results (I.e. the consistency concept) + The basic principle of IAS2 is at inventories should be valued at the lower of cost and net realizable value. - Cost Cost includes all the expenditure incurred in bringing the product or service to its present location and condition Net realisable value - Net realisable value (NPV) is the revenue (sales process) expected to be earned in the future when the goods are sold, less any selling costs incurred. Unit cost Unit cost is the actual cost of purchasing identifiable units of inventory. - FIFO In FIFO, the assumption is made for costing purposes that the first items of inventory received are the first items to be sold. - LIFO In FIFO, the assumption is made for costing purposes that the last items of inventory received are the first items to be sold. - Weighted Average Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of the period and the cost of similar items purchased or produced during the period. - Overhead expenses Overhead expenses which must be excluded are: * Selling costs (excluded because they relate to goods cols, not those held in inventory) * Storage costs * Abnormal wastage of materials, labour or other production costs * Administration overheads.