ACCTG 101 Lecture Notes - Lecture 8: Income Statement, Operating Cash Flow, The Home Depot
Document Summary
Periodic inventory system the accounting records for inventory and cost of goods sold are updated only at the end of the accounting period (month, year, etc. ). Thus, in the middle of the period, there is no record that shows how much inventory is on hand or how much has been sold. Capitalization means that a cost is recorded on the balance sheet but only expensed on the income statement once the inventory asset is used up. Inventories (merchandise) the amount recorded is the purchase price. For manufacturers, there are three costs making it more difficult to record. How long each unit takes to construct and the rates of each labor class working on the product. Includes costs of depreciation, utilities, supervisory personnel, and other costs that contribute to manufacturing activities. If all inventory purchased or manufactured during the period is sold, the cogs is equal to costs of the goods purchased or manufactured. Three inventory costing methods (cost flow assumption.
