AFM101 Chapter Notes - Chapter 8: Weighted Arithmetic Mean, Gross Profit, Perpetual Inventory

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Inventory is tangible property that is either 1) held for sales in the normal course of business or 2) used to produce goods or services for sale. Reported on statement of financial position as a current asset, because used or converted into cash within one year or within next operating cycle, whichever is longer. Companies that do not manufacture the products they sell, but simply purchase those products and then sell them to customers are called merchandisers. Wholesale merchandisers distribute product to retail merchandisers for resale to customers through retail stores. Merchandise inventory goods or merchandise held for resale in the normal course of business. Raw materials inventory items acquired by purchase, growth, or extraction, for processing into finished goods. Work-in-progress inventory goods in the process of being manufactured by not yet complete. Finished goods inventory manufactured goods that are complete and available for sale. Inventory is recorded in conformity with the cost principle.