BU127 Chapter 8: Chapter 8 BU127
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BU127 Full Course Notes
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Document Summary
3 accounting system roles: provide accurate info for financial statements provide up-to-date info on inventory quantities & costs associated provide info to protect & control inventory: merchandise inventory goods held for resale. Earnings of employees who work directly on product. Factory overhead: manufacturing costs that aren"t raw material or direct labour costs. 3 inventory cost flow stages: purchasing/production activities additions to inventory accounts on sofp inventory items sold and amounts become cost of sales on soe. Cost of sales = beginning inventory + new purchases - ending inventory. Separation of responsibilities for accounting and handling of inventory. Detailed inventory record is maintained, recording each purchase & sale during accounting period. Ei and cos are determined at end of accounting period based on a physical count. Inventory purchases are debited to temporary account purchases. Revenues are recorded at time of each sale. Identifies the cost of each specific item sold.
