CATEGORY TYPE: Finance & Accounting

COURSE NAME:Advanced Inventory Accounting and Costing


UPCOMING EVENTS


START DATE END DATE CITY/COUNTRY PRICE Request
This course can be scheduled at your convenience, to request this course please click here
INTRODUCTION:

Whether you are a merchandiser, manufacturer, contractor or a service provider, inventory has a major impact on your net income and on the balance sheet. In this course, participants are guided step by step through best practices for the purchasing process, the allocation of direct costs, indirect costs and production costs and comparisons between the different cost flow assumptions such as FIFO, LIFO and weighted average cost along with their impact on the financials and the physical counting of goods. We will discuss the importance of having accurate inventory figures reflecting their net realizable value, use Excel and pivot tables to analyze inventory balances, calculate values of obsolete inventory and simulate calculations of weighted average cost.

OBJECTIVES:

By the end of the course, participants will be able to:

  • List different types and reasons to hold inventory and construct the overall inventory cycle from purchase to sales
  • Justify difference between perpetual and periodic inventory methods and evaluate inventory cost allocation techniques
  • Recognize and correctly measure inventory under International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP)
  • Account properly for 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 how they affect the company’s financial position and income statement
  • Outline the various approaches for cost accounting
  • Employ Excel and pivot table tools and techniques to analyze inventory and calculate weighted average costs
OUTLINE:

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 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 on 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

 

Inventory cost flow assumptions

  • First-in First-out (FIFO) and Last-in First-out (LIFO)
  • Weighted average and moving average
  • Specific identification

 

Inventory estimation and cost accounting approaches

  • Inventory estimation techniques
    • Gross profit method
    • Retail method
    • Cost accounting approaches
      • Traditional costing versus activity based costing
      • Target costing versus cost plus pricing method
      • Standard cost accounting
      • Throughput accounting
WHO SHOULD ATTEND:

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.

DURATION:
    • 5 Day(s)
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    Sabic

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    Sabic

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    Sabic

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    Sabic

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    Mobily

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    General Authority of Civil Aviation (GACA)

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    Sabic

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    Sabic

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    Al-Suwadi Services

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    Coldstorec Group Of Saudi Arabia

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    Saudi Aramco

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    Al-Suwadi Services

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    Al Khodari Company

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    Al Khodari Company

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    Al Khodari Company

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    Al Khodari Company