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ACC 240 Chapter 7 Notes - Accounting Chapter 7 Notes...

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Accounting Chapter 7 Notes Inventory: is tangible property held for sale in the normal course of business or used in producing goods or services for sale. Merchandise Inventory: include goods held for resale in the ordinary course of business Raw Materials inventory: Items acquired for processing into finished goods. Work in process inventory: includes goods in the process of being manufactured Finished goods inventory: includes manufactured goods that are complete and ready for sale Exhibit 7.3 Direct labor: refers to the earnings of employees who work directly on the products being manufactured Factory Overhead: are manufacturing costs that are not raw material or direct labor costs Nature of Cost of Goods Sold Goods available for sale: refers to the sum of beginning inventory and purchases (or transfers to finished goods) for the period Cost of Goods Sold Equation BI + P – EI = CGS BI = beginning inventory P = purchases of merchandise during the year EI = Ending inventory CGS = cost of goods sold Exhibit 7.4
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