Financial Act Chpt 6 Notes

Reminder sales cost of goods sold gross profit to

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Unformatted text preview: sold, on the income statement. Reminder: Sales - Cost of Goods Sold = Gross Profit. To determine cost of goods sold for a company using the periodic inventory method: Beginning inventory + Purchases = Cost of Goods Available - Ending inventory = Cost of Goods Sold! When is inventory considered sold? • FOB Shipping Point: Risk of loss and ownership passes to the buyer at the time the goods are shipped. Sale/Cost of Goods Sold/Reduction of Inventory is recorded at that point. • FOB Destination: Risk of loss and ownership passes to the buyer once the goods are received by the buyer. Sale/Cost of Goods Sold/Reduction of Inventory cannot be recorded until goods are accepted by the buyer. • Consignment sales: Consignee acts as an agent to sell the items for the consignor, bu...
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