ACC 100 Lecture Notes - Lecture 6: Exchange Rate, Gross Profit, Income Statement

• School: Ryerson University
• Department: Accounting
• Course: ACC 100
• Professor: Maurizio Di Maio

Document Summary

Understanding cost of inventory is good for decision making: allows owners to consider changing supplier, using different shipping companies, reducing operating expenses. Perpetual inventory system: does not track individual prices for inventory. Inventory costing methods: better track per unit costs, assign costs to each inventory, determine cost of goods sold. Specific identification: cost of inventory is calculated and tagged with a cost, when item is sold cost of that specific item is moved from the inventory (asset decreases) to. Cons: expensive and time consuming, only used by businesses that carry unique products to identify the serial number. Example: used by car dealerships each car has a unique vin. Selling an item with specific identification: sales revenue increases and cash increases. Inventory decreases and cost of goods sold increases. Includes all the revenue and expenses account: gross profit at the bottom (revenue- expenses, gp percentage is gp/sales revenue.