Business Administration 2257 Chapter Notes - Chapter 6.1: Inventory Turnover, Financial Statement, Perpetual Inventory

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: J S

Document Summary

Errors made when determining the cost of inventory. Errors made when recording the purchase of inventory. Valuing inventory at the lower of cost and net realizable value. All companies are required to determine their inventory quantities at the end of the period. Companies using perpetual system must still count their inventory at end of period because: they must check the accuracy of their perpetual inventory records, they must determine the amount of inventory lost due to shrinkage or theft. Determining inventories involves: taking a physical inventory of goods on hand, determining the ownership of goods. Companies will count inventory when the business is slow or not open: this means the end of their fiscal year is often a slower period since they count at that time. If terms are fob destination = belongs to the seller until it reaches the buyer. If terms are fob shipping point = belongs to the seller until shipped.