BUS 214 Chapter Notes - Chapter 6: Inventory Turnover, Financial Statement, Write-Off
Document Summary
Lo 1: show how to account for inventory cost methods. Cogs is typically the largest expense on is. Gross profit = net revenues - cogs. Inventory listed as an expense (cogs) on is and asset (inventory) on bs. Sales of inventory add to sales revenue and decrease inventory. Example of how to report there is a markup. Sale revenue is based on sale price of inventory sold () Cogs is based on cost of inventory sold () Inventory on bs is based on the cost of the inventory still on hand () Gross profit, or gross margin, is sales revenue - cogs. Equations: because those goods belong to another company. Companies do not include in inventory any goods they hold on consignment. Inventory also includes when the company still holds possession of the goods, Cost per unit of inventory is challenging since companies purchase goods at which depends on the shipping terms varying prices throughout the year.
