COMMERCE 1AA3 Chapter Notes - Chapter 6: Gross Profit
7 Jan 2017
School
Department
Course
Professor
Document Summary
Merchandising & manufacturing: sales revenue, cost of goods sold (cogs, gross profit, operating expenses. Sales revenue reduced by (contra-revenues): credit card discounts, sales, returns, and allowances, sales discounts (cash discounts) given to customers to encourage early pay. Detailed records of cost of each inventory purchase and sale maintained. Cogs determined and inventory updated after each sale. Cogs determined and inventory updated only at end of accounting period: adjusting entry required. Cost of ending inventory = cost of goods available for sale cost of goods sold. Weighted average: cost per unit same for all units in inventory. When inventory cost increasing: fifo cost of goods sold is lower gross profit is higher, weighted average cost of goods sold is higher gross profit is lower. Lcnrv lower cost or net realizable value: Cost determined by one of the cost flow assumptions. Net realizable value amount of which company expects to sell inventory. Cogs average turnover (beg. inventory + end inventory 2)
