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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This note was uploaded on 01/22/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida.
- Spring '08
- Financial Accounting