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Chapter 5.docx - Inventory and Cost of Goods Sold...

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Inventory and Cost of Goods Sold Merchandising and Manufacturing Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Service Service Revenue Operating Revenue On Income Statement: Sales Revenue Less: Credit Card Discounts Sales Discounts (Cash Discounts): Discounts given to customers to encourage early payment Sales Returns and Allowances Net Sales Income Statement for a Merchandising Firm Inventory Asset held for resale Used to produce goods and services for sale Merchandising firms only have merchandising inventory Manufacturing Firms have three types of inventory: Raw Material Work in Process Finish Goods Cost Principle requires inventory be recorded at the price paid + all cost incurred to bring the price to saleable conditions Invoice price Freight and Insurance Inspection Costs Preparation Costs
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INVENTORY SYSTEMS: PERPETUAL Detailed records of the cost of each inventory purchase and sale are
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