3.19(1st day after test 2)

3.19(1st day after test 2) - Todays Topic PLEASE TURN OFF...

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Unformatted text preview: Todays Topic PLEASE TURN OFF CELL PHONES Financial Accounting Information System This class will describe GAAP for: Balance Sheet: Inventory Income Statement: Cost of Goods Sold, Period Expenses Statement of Cash Flow effect Fig 159 What is inventory? Inventory is goods purchases for resale. Service companies (banks, insurance, repair, consultants) have little or no inventory Merchandising companies (wholesale & retail stores) generate revenue by buying & selling merchandise inventory Manufacturing companies have inventory in various phases of production WE WILL STUDY MERCHANDISING Fig 160 Why is inventory cost important? For Merchandising Company: Sales Revenue- Cost of Goods Sold Gross Margin Gross margin (or Gross Profit) is THE measure of success! Inventory is the key to computing Cost of Goods Sold! Fig 161 What is the cost of inventory? Four topics to learn: 1. Identify product cost 2. Compute cost of goods available for sale 3. Allocate cost of goods available for sale between inventory and cost of goods sold 4. Other topics Fig 162 Product Costs v Period Costs Product Costs Costs included in inventory. (price of goods purchased, shipping and handling, transit insurance) Period Costs Costs not included in inventory, such as Selling & Administrative Costs (salaries, commissions, advertising, etc.) Fig 163 Compute Cost of Goods Available for Sale Beginning Inventory Balance + Inventory Purchased During the Period = Cost of Goods Available for Sale Fig 164 Allocate Cost of Goods Available for Sale Cost of Goods Available for Sale Merchandise Inventory (Balance Sheet)...
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This note was uploaded on 03/31/2008 for the course ACIS 2115 taught by Professor Jayardley during the Spring '07 term at Virginia Tech.

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3.19(1st day after test 2) - Todays Topic PLEASE TURN OFF...

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