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Flashcards in Chapter 5 Power Point Deck (10)
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1

In Transit is...

recorded as inventory if you have ownership

2

FOB Shipping Point

-Manufacturer is not responsible for item after leaving their hands
-The buyer is responsible while item is in transit
-Buyer pays for shipping
*Sellers like this one best*

3

FOB Destination

-Manufacturer is responsible for the item until it is in the buyer's hands
-Seller is responsible for shipping cost
*Buyers like this one best*

4

Consignor

Owns and reports the inventory

5

Consignee

Possesses and sells the inventory

6

Consignment

One party sells goods for another party (owner)
example: Pawn Shop workers

7

Damages/Obsolete

-Recognize item at net realizable value
-If an item can not be sold, written off

8

Physical Counts

-At least done annually
-Unconnected counters
-Two counters for each item
-Inventory counts are recorded on renumbered tickets
*Companies usually hire outside people to do the counting*

9

Shrinkage

Debit cost of goods sold
Credit inventory

10

First-In, First-out

Inventory is sold in the order it is received:
-Older items = cost of goods sold
-Newest items = ending inventory
Rising prices:
-FIFO = Higher Net Income
Falling prices:
-FIFO = Lower Net Income
Example: Jewel or any produce store