Toĭistinguish the five different costing methods and their effect on cost flows. The following table describes a sequence of tasks, with links to the topics that describe them.
It includes the reporting of manufacturing costs and inventory costs, that is, the value of items.Ĭentral principles to understand are that costing methods define how items are valued when they leave inventory, that cost adjustment updates the cost of goods sold with related purchase costs posted after the sale, and that inventory values must be posted to dedicated G/L accounts at regular intervals. Managing inventory costs is concerned with recording and reporting business operating costs.
