BUS 320 Lecture Notes - Lecture 34: Perpetual Inventory, Subledger, Gross Profit
16 Sep 2016
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Held for sale in the ordinary course of business. In the process of production for such sale. In the form of materials or supplies to be consumed in the production process or in the rendering of services. The following items are included in the seller"s inventory. Goods in transit (e. g if seller has title during shipment like fob destination contracts) Goods sold with high rates of return that cannot be estimated. Items often measured at nrv rather than cost; and. A merchandizing company has one inventory account on the balance sheet called merchandizing inventory. The cost of the inventory sold is transferred to cost of goods sold (cogs) on the income statement. A manufacturing company will normally have three inventory accounts on the balance sheet 1) raw materials, 2) work in process, and 3) finished goods. Cost of goods manufactured (cogm) is used by a manufacturer which is similar to the cogs.
