A
What type of account is inventory and what financial statement can you find it on?
asset on the balance sheet
What is FOB Shipping point?
ownership changes upon being shipped
what are the 2 types of inventory systems?
perpetual and periodic
what is the COGS formula
Beg Inv
+ purchases
- End Inv
= COGS
What is it called when the first inventory that is purchased if the first to be sold?
FIFO
What type of account is COGS and what financial statement can you find it on?
expense on the income statement
What is FOB Destination?
ownership changes upon arriving at destination (delivered)
what is a perpetual inventory system?
Keeps a running record of all good bought, sold, and on hand
what is Beginning inventory + purchases?
Goods available for sale
what is the gross profit percentage formula
gross profit / net sales revenue
What is the cost of inventory that's been sold?
Cost of Goods Sold or COGS
What does FOB stand for?
free on board
what is a periodic inventory system?
Does not keep a running record of all goods bought, sold, and on hand AKA COGS is calculated once, at the end of a period
when inventory goes home with a customer it becomes a(n):
expense
Order the cost assumptions by highest N.I. to lowest (exclude SI)
FIFO
WA
LIFO
What is the cost of inventory on hand?
Inventory
how do you find gross profit?
sales revenue less COGS
When a store makes a sale, what two entries are needed to record the sale?
Debit Cash or Accounts Receivable and credit Sales Revenue
Debit Cost of Goods Sold and credit Inventory
what are the 4 cost assumptions
FIFO, LIFO, SI, WA
what is the cost of inventory formula?
Purchase price
+ freight in
- purchase returns
= net purchase of inventory
What is gross profit?
The excess of sales revenue over cost of goods sold
what does the merchandising income statement formula?
Revenue
less COGS
= Gross Profit
less Operating Expenses
= Net Income
what does (ending inventory - beginning inventory + COGS) give you?
Which cost assumption is better for tax purposes and which cost assumption is better for investor purposes?
Tax -> LIFO
Investor -> FIFO
when inventory costs are rising... which COGS is lowest and which EI is lowest?
(FIFO or LIFO)
FIFO: COGS is lowest, EI is highest
LIFO: COGS is highest, EI is lowest