MGT120H5 Lecture Notes - Lecture 7: Accounts Payable, Balance Sheet, Gross Profit
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MGT120H5 Full Course Notes
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Inventory goods or products the company sells. It is a current asset on balance sheet. Cost of goods sold inventory sold. It is an expense on the income statement. Gross profit excess of sales revenue over the cogs. Balance sheet = cost of inventory = # of units on hand x unit cost. Income statement = cogs = # of units sold x unit cost. Perpetual inventory system systems maintain a running record. Periodic inventory system systems do not keep a continuous to show the inventory on hand record of inventory on hand at all times (i. e. usually smaller businesses) Both methods count inventory once a year. Net purchases of inventory = purchase price of inventory + freight in purchase returns and allowances purchase discounts. Net sales = sales revenue sales return and allowances sales. Specific unit cost some businesses deal in unique inventory items.
