Flashcards in Inventory Deck (23):
Purchases - Net of Discounts, Freight, Warehouse expenditures
FOB Shipping Point puts the inventory into the hands of the buyer from the loading dock
FOB Destination keeps the items in the seller's inventory until it reaches the buyer
Interest on liabilities to vendors
Shipping expense to customers
Under the gross method, discounts are recorded only when used.
Under the net method, discounts are recorded whether used or not.
Unused discounts are allocated to financing expense.
Gross Margin : Sales - COGS (BI + P - EI)
Inventory is counted at certain times throughout the period
Weighted-average cost flow method is used.
Inventory count continually updated
Uses a moving-average cost flow method
Under the FIFO system, periodic and perpetual inventory methods will both have the same ending inventory.
COGS / Average Inventory
365 / Inventory Turnover
The CONSIGNOR holds the consigned items in their inventory count. The cost includes the shipping to the consignee.
No. Consignment goods are maintained in the inventory of the consignor, not the consignee.
Misstatement of beginning inventory does NOT have an effect on ending retained earnings.
Misstatement of ENDING inventory does have an effect on retained earnings.
EI Over : COGS Under : ERE Over
EI Under : COGS Over : ERE Under
The first (oldest) inventory you have in stock is the first inventory you record for COGS purposes. If your oldest inventory on the shelf cost you $1 when you bought it, COGS is $1
This is just for inventory pricing. It has nothing to do with physically selling the oldest item on the shelf - It is purely for accounting purposes
The last (newest) inventory you have in stock is the first inventory you record for COGS purposes. If your newest inventory on the shelf cost you $1.50 when you bought it, COGS is $1.50
COGAS / Total Units : Weighted Average Cost Per Unit
FIFO's relationship to COGS will be opposite LIFO's relationship to COGS in periods of falling/rising prices.
FIFO has the Lowest COGS
FIFO is a cat that sees a mouse starts Low and is Rising
If COGS is Low, that means EI is High
FIFO has the Highest COGS
Remember: FIFO, that silly cat, got High from Catnip and is Falling off the couch
If COGS is High, that means EI is Low