Chapter_6_Notes

Chapter_6_Notes - Chapter 6 Objectives 1. Explain the...

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Chapter 6 Objectives 1. Explain the recording of purchases and sales using a Periodic inventory system. 2. Learn how to determine the Cost of Goods Sold using a Periodic inventory system. 3. Learn how to determine Inventory Quantities. 4. Apply the inventory Cost Flow methods using a Periodic Inventory system. 5. Explain the Financial Statement and Tax Effects of inventory cost flow assumptions. 6. Explain Lower of Cost or Market (LCM) . 7. Compute and Interpret the Inventory Turnover Ratio .
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Periodic Inventory 1. Usually for small businesses 2. Less Cost 3. Mostly in conjunction with manual accounting systems Quick review of Perpetual Inventory Accounting: 1. Purchases of Inventory Merchandise Inventory $$$$ Accounts Payable $$$$ To record the purchase of inventory 2. Sale of Inventory Accounts Receivable $$$$ Sales $$$$ To record the sale of inventory Cost of Goods Sold $$$$ Merchandise Inventory $$$$ To record the cost of inventory sold 3. Freight-In, Purchase Returns and Allowances, and Purchase Discounts are all either debited or credited directly to Merchandise Inventory.
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This note was uploaded on 04/18/2008 for the course BUS 210 taught by Professor Schmeltz during the Spring '08 term at SUNY Stony Brook.

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Chapter_6_Notes - Chapter 6 Objectives 1. Explain the...

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