BU127 Chapter Notes - Chapter 7: Income Statement, Inventory Turnover, Weighted Arithmetic Mean
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BU127 Full Course Notes
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Chapter #7 - inventories and cost of goods sold. Describe the issues in managing different types of inventory. Explain how to report inventory and cost of goods sold. Compute costs using three inventory costing methods. Report inventory at the lower of cost and net realizable value. Analyze and record inventory purchases, transportation, returns and allowances, and discounts. Evaluate inventory management by computing and interpreting the inventory turnover ratio. The goal of inventory management are to . Maintain a suf cient quantity to meet customers needs. Minimize the cost of acquiring and carrying inventory. Manufacturing: companies hold three types of inventory. Consignment inventory: are goods held on behalf of the owner. Goods in transit: are inventory items being transported. Inventory is reported on the balance sheet as a current asset. Its cost is removed from he inventory account. Recorded in cost of goods sold in the income statement. Beginning inventory + purchases - costs of goods sold = ending inventory.
