Accounting Lecture 8 Notes
Accounting Lecture 8 Notes ACCT 225 001
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This 2 page Class Notes was uploaded by Jeremiah Waller on Tuesday October 27, 2015. The Class Notes belongs to ACCT 225 001 at University of South Carolina taught by Leslie Brunner in Summer 2015. Since its upload, it has received 18 views. For similar materials see Introduction to Financial Accounting in Accounting at University of South Carolina.
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Date Created: 10/27/15
Accounting Lecture 8 Notes Inventory Pa rt 1 Inventory A tangible resource that is held for resale in the normal course of operations 0 quotHeld for resalequot Differentiates inventory from other operational assets 0 Inventory is recorded at its acquisition cost which includes all costs incurred to get it delivered or prepared for resale Types of Inventory Merchandise Inventory Consists of products acquired in a nished condition ready to sell without further processing Example Department store or Grocery store Manufacturer Companies hold 3 different types of inventory and each represent a process in manufacturing 0 Raw Materials Inventory 0 Work in Process Inventory 0 Finished Goods Inventory Goods in Transit 0 Free on Board FOB Destination SELLER pays the shipping charges and owns the merchandise until it39s delivered to the buyer 0 Free on Board FOB Shipping Point BUYER pays the shipping charges amp owns the merchandise during transit Goods on Consignment o Goods on consignment ARE NOT owned by the seller 0 The seller only has physical possession of the goods 0 The supplier consignor retains ownership until the goods are sold Costs Included in Inventory 0 Purchase price Taxes paid Freight charges Insurance during Transit Labor required to assemble product 0 Returns amp Allowances from supplier Purchase discounts from supplier Balance Sheet amp Income Statement Reporting 0 When inventory is purchased manufactured It s an Asset 0 When inventory is sold It s cost becomes COGS Cost of Goods Sold Types of Inventory Systems 0 Perpetual Inventory amp COGS updated with each purchase and sale 0 Periodic Inventory amp COGS updated only at the End of the Period Inventory Costing Methods 0 O O 0 Speci c Identi cation Firstin Firstout FFO Lastin Firstout LFO Weighted average