COMMERCE 1BA3 Lecture Notes - Matching Principle, Combined Gas And Steam, Perpetual Inventory
2 Nov 2013
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Document Summary
Chapter 8: reporting and interpreting cost of goods. Merchandising and manufacturing (sell goods): sales revenue, cost of goods sold, gross profit, operating expenses. Services (sell services): services revenue, operating expenses. Inventory is an asset held for resale or used to produce goods/services for sale. Ending raw material inventory = beginning raw materials inventory + raw materials purchases raw materials used. Ending work in process = beginning work in process + (direct labour + raw materials used + overhead) cost of goods manufactured. Ending finished goods inventory = beginning finished goods inventory + cost of goods manufactured cost of goods sold. (do not need to know t-accounts just names) Cost principle requires that inventory be recorded at the price paid plus all costs incurred to bring inventory to saleable conditions. Includes: invoice price (purchase price and taxes, freight and insurance (transportation costs, inspection costs, preparation costs (labour to assemble, packaging, engraving with company name/logo)
