COMMERCE 1AA3 Lecture Notes - Lecture 2: Cash Flow, The Royal And Ancient Golf Club Of St Andrews, Net Income
13 Dec 2017
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Document Summary
Properties of inventory (+ 3 types) : owned by the business, ready for resale, raw materials, work in process, finished goods. Inventory and cogs only updated at period end (requires aje @ period-end) Disadvantages: lack of up-to-date inventory and cogs information. + freight and insurance, inspection costs, preparation costs. Inventory and cogs updated after each purchase and sale. Uses inventory and cogs accounts during the period. Advantages: easy & accurate access to inventory availability; up-to-date. Disadvantages: costly and timely to learn the system. Inventory quantities: physical count, determining ownership of goods, goods in transit, fob shipping point: ownership with buyer, fob destination: ownership with supplier, consigned goods: holder of goods (consignee) does not own the inventory. Consignor records inventory: other issues: damages, sold goods on hand (sold, on hold for pick up) 10 = # of days to pay to receive discount n = otherwise, the full amount is due. 30 = maximum days to pay full amount (credit period)
