BUSI 1004 Lecture Notes - Lecture 6: Income Statement, Retained Earnings, Weighted Arithmetic Mean

• School: Carleton University
• Department: Business
• Course: BUSI 1004
• Professor: Shannon Butler

Document Summary

Inventory is continually being updated: inventory purchases and sales are recorded directly in the inventory account: Periodic inventory system: periodic system-inventory is counted at the end of each year, inventory purchases are debited to the purchases" account, cogs is computed at year end. Purchase allowances: we keep merchandise but is given a credit. All of them are income statement accounts and get closed at the end of the year to r/e. Periodic system-calc cogs: the purchase account and all contra accounts are closed out to zero, the inventory account is adjusted to what the ending balance should be, the amount to balance is equal to cogs. An inventory count at year-end shows that ending inventory cost is ,000. Taking possession of inventory: when does the inventory purchase belong to you (i. e. and therefore included in inventory, depends on shipping terms, fob destination-means that seller owns the goods until you receive them; seller pays the shipping.