# Accounting Chapter 7

 The flashcards below were created by user neKen on FreezingBlue Flashcards. consignment inventory refer to goods a company is holding on behalf of the goods' owner good in trasit inventory items being transported Formula COGS = beginning inventories + purchases - ending inventories ending inventories = beginning inventories + purchases - COGS Goods available for sale = beginning inventories + purchases FIFO COGS (income statement) - Oldest costInventory (Balance sheet) - Newest cost Weighted Average COGS (income statement) - average costInventory (Balance sheet) - average cost formula = cost of goods available for sale/ # of units available for sale = \$410/50 units = \$8.20 per unit Why LIFO are no longer permitted 1. does not fairly represent the actual flow of costs2. reported on the balance sheet is not a fair representation of the most recent costs of inventories on hand3. can result in large distortions of reported income when older inventory costs, which are typically lower, are expenses to cost of goods sold Inventory turnover ratio formula = COGS / Average inventory - # of times inventory turns over during the period- higher ratio means faster turnover- lower gross profit % has a faster inventory turnover Days to sell formula = 365/inventory turnover ratio - average # of days from purchase to sale- higher # means a longer time to sell FIFO - Perpetual and Periodic method of calculation are the same Weight average - Perpetual Add only sold unit prices and divide by only units sold to figure out cost of goods sold. Then use the goods available for sale - cost of goods sold = goods available for sale + purchase = ending inventory Weight average - periodic Add all the unit prices and divide by the all the unit to obtain the average unit prices. Then use the average unit prices to figure out cost of goods sold and ending inventory or goods available for sales - ending inventory = cost of goods sold AuthorneKen ID245367 Card SetAccounting Chapter 7 DescriptionChapter 7 - Reporting and interpreting inventories and Cost of goods sold Updated2013-11-06T10:03:28Z Show Answers