BUSI 1101 Lecture Notes - Lecture 1: Income Statement, Perpetual Inventory, Consignee

• School: Memorial University
• Department: Business Administration
• Course: BUSI 1101
• Professor: N Wans

Document Summary

Accounting chapter 6: reporting and analyzing inventory. Need to consider ownership of goods when taking inventory. Goods in transit at the end of the period make the determination of ownership more complicated: determine who has legal title to goods in transit, include in inventory if company has legal title. Apply freight/shipping concepts from chapter 5: fob shipping point versus fob destination. Ownership of consigned goods remines with the owner (the consignor), not the holder of the goods (the consignee) Goods taken home on approval by a customer are still owned by the company. Once inventory quantities are counted, must apply unit costs to determine total cost of inventory. Units of the same inventory can be purchased at different prices. Can only be used where: actual costs of each item can be determined, goods are easily distinguishable (not easily interchangeable, or for goods produced and segregated for specific projects.