Notes Ch 8

Notes Ch 8 - Jorge Rossello Busi 100 Chapter 8 Notes I....

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Jorge Rossello Busi 100 Chapter 8 Notes I. Determining and Reporting the Cost of Inventory a. Inventory: A current asset bought or manufactured for the purpose of selling in order to generate revenue. b. Capitalization: The process of recording as an asset all the normal and necessary costs associated with getting the asset into position and condition to be sold or used to help generate revenue. II. Perpetual and Periodic Inventory Systems a. Perpetual Inventory System: Accounting system that maintains an ongoing record of all inventory items; records increases and decreases in inventory accounts as they occur as well as the cost of goods sold to date. i. With perpetual inventory system, maintenance of a separate subsidiary ledger showing data (quantity, type, location) about the individual items on hand is essential. ii. Account Shown in Journal Entry = Inventory b. Periodic Inventory System: Accounting system that does not maintain an ongoing record of all inventory items; instead, ending inventory is determined by physical
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Notes Ch 8 - Jorge Rossello Busi 100 Chapter 8 Notes I....

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