MGCR 211 Lecture 10: lecture 10 accounting
17 Oct 2016
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Document Summary
Need to consider ownership of goods when taking inventory. Goods in transit at the end of the period make the determination of ownership more complicated: determine who has legal title to goods in transit. Include in inventory if company has legal title (fob shipping) To ensure inventory is properly counted, companies must have a good system of internal control: employees who perform the count should not have responsibility for custody or record-keeping, counter establishes validity of item : Condition of each item: second count by another employee or auditor. Once inventory quantities are counted, companies must determine unit costs to determine total cost of inventory. Units of the same inventory can be purchased at different prices: prices change over time. In the real world unit costs often change during the period. When unit costs change there are different methods to compute cost of inventory.
