ACTG 1P91 Lecture 14: Inventory

• School: Brock University
• Department: Accounting
• Course: ACTG 1P91
• Professor: Sohyung Kim

Document Summary

Inventory refers to products a company owns for the purpose of selling to customers. Retailers keep track of one account; merchandise inventory. Manufacturers keep track of 3 accounts; raw materials, work-in-process, finished goods. Inventory records are updated every time an item is purchased, sold, or returned more control but more costly. Inventory records are updated at the end of period by physically counting inventories less control but less costly. Transportation cost (freight-in), if and when fob (free on board) shipping point. Fob destination indicates that the sale will occur when it arrives at the destination. This means that the seller is responsible for delivering the goods to the destination. Thus, the seller pays for the freight costs and is responsible for any loss or damages while in transit. Fob shipping point indicates that the sale will occur at the shipping point. This means that the buyer is responsible for delivering the goods to the destination.