Inventory estimation

Unit 5: Accounting for Inventories and Cost of Goods SoldTopic 3 of 5

Browse the Financial Accounting and Analysis syllabus

Financial Accounting and Analysis

15 units

1 Basic Understanding of Financial Accounting
2 Conceptual Framework of Accounting
3 Accounting Process
4 Accrual Basis of Accounting
5 Accounting for Inventories and Cost of Goods Sold
6 Accounting for Cash and Internal Control
7 Accounting for Receivables
8 Accounting for Current Liabilities and Contingencies
9 Accounting for Long-Lived Assets
10 Accounting for Long Term Liabilities
11 Accounting for Shareholders' Equity
12 Basic Financial Statements
13 Cash Flow Statement
14 Value Added Statement
15 Analysis of Financial Statement

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What the syllabus expects

Retail-inventory method
Gross-profit method

Inventory estimation

Bachelor of Business Studies (BBS) — First Year

Subject: Financial Accounting and Analysis (MGT 211)

Unit 5: Accounting for Inventories and Cost of Goods Sold

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

Explain the scope and key elements of inventory estimation.
Identify the accounting treatment, prepare relevant records or calculations and interpret their financial effects.

Curriculum Scope

Retail-inventory method
Gross-profit method

Detailed Microsyllabus

Retail method
1. Cost and retail amounts of available goods.
2. Cost-to-retail relationship and estimated inventory.
3. Assumptions and estimation limitations.
Gross-profit method
1. Use an estimated gross-profit relationship.
2. Estimate cost of goods sold and ending inventory.
3. Distinguish estimation from a verified physical count.

Curriculum reference: Tribhuvan University, Faculty of Management, BBS curriculum with first-year syllabus, PDF pages 20-22.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit lecture hours apply to the whole unit; no separate topic hours or marks are assigned here.