Accy Ch 8

The flashcards below were created by user SusanneS28 on FreezingBlue Flashcards.

  1. Types of Inventory (intermediaries)
    • Merchandise Inventory: Goods acquired for resale
    • Manufacturing Inventory: Raw materials, WIP, Finished goods. Overhead costs (depreciation, equip, electricity)...
  2. Cost flow for a manufacturing company
    • 1. Raw Materials Purchased (debit raw materials)
    • 2. Direct Labor incurred (debit direct labor)
    • 3. Manufacturing overhead incurred (debit manufacturing overhead)
    • 4. Raw materials used (credit raw material)
    • 5. Direct labor applied (credit direct labor)
    • 6. Manufacturing overhead applied (credit manufacturing overhead)
    • 7. WIP transferred to finished goods (credit WIP)
    • 8. Finished goods sold (credit finished goods)
  3. Perpetual Inventory System
    • The inventory account is CONTINUOUSLY updated as purchases and sales are made.
    • designed to track inventory quantities from the purchase to the sale.

    Balance of the COGs appears on the Income statement at the end of the period
  4. Periodic Inventory System
    The inventory account is adjusted at the end of a reporting period.

    • Beginning Inventory
    • + Net Purchases (temp account)
    • COG Available for Sale
    • -Ending Inventory
    • =COGS
  5. Periodic COGS
    • Beginning Inventory
    • +Purchases
    • =COG available for sale
    • -ending inventory
    • = COGS
  6. What is Included in Inventory
    • Goods in transit: depends on f.o.b. shipping terms.
    • FOB shipping point: owned by the buyer
    • FOB destination: owned by the seller until received by the buyer.
    • Consignment: owned by us and should be included in inventory
  7. Expenditures included in inventory
    • Add: invoice price = freight-in on purchases
    • Less: purchase returns and allowances = purchase discounts
  8. Purchase returns under periodic and perpetual
    • Perpetual: debit A/P, credit Inventory
    • Periodic: debit A/P, credit purchase returns (contra a/c)
Card Set:
Accy Ch 8
2013-04-24 13:29:47

Accy Ch 8
Show Answers: