Ch 8 Inv Part I_Intermediate - CHAPTER 8 INVENTORY INVENTORY RECORDING SYSTEMS The Focus Of Today's Class Is Merchandising Companies All Merchandisers

Ch 8 Inv Part I_Intermediate - CHAPTER 8 INVENTORY...

This preview shows page 1 - 6 out of 25 pages.

C HAPTER 8 – I NVENTORY I NVENTORY R ECORDING S YSTEMS The Focus Of Today’s Class Is Merchandising Companies. All Merchandisers Record The Following Basic Transactions: 1. Purchases Of Inventory 2. Sales Of Inventory Revenue Cost Of Goods Sold (COGS) However, Merchandisers Have Two Options For Recording These Transactions In Their Books. They May Use Either The: 1. Perpetual Method – COGS Recorded Each Time A Sale Occurs 2.PeriodicMethod– COGS Recorded PeriodicallyWhat Is The Advantage Of The Perpetual System?
1. Product Costs 2. Period Costs Only Product Costs Should Be Included In Inventory The Most Significant Product Cost Is, Of Course, The Inventory’s… Purchase Price Page 4 of 25
However, The Following Are Also Considered Product Costs: Effect On Inventory Value 1. Shipping/Freight-In Increase 2. Purchase Discounts Decrease 3. Purchase Returns And Allowances Decrease There Are Two Methods For Recording Purchase Discounts: 1. Gross Method Discounts Are Not Recorded Unless They Are Taken 2. Net Method Accounts Payable Are Recorded Net Of Discounts Discounts That Are Not Eventually Taken Are Recorded As Either Interest Expense Or Purchase Discounts Lost

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture