BUSI 1001 Lecture Notes - Lecture 6: Weighted Arithmetic Mean, Inventory Turnover, Gross Profit

• School: Carleton University
• Department: Business
• Course: BUSI 1001
• Professor: Jacques Maurice

Document Summary

Inventory purchases are debited to the purchases" account (not the inventory account) Cost of goods sold (cogs) is computed at year end: calculating costs of goods sold: The purchase account and all contra accounts are closed to 0. The inventory account is adjusted to what the ending balance should be. The amount to balance = the costs of goods sold. I. e: cogs = beginning inventory + purchases = costs of goods available for sale - ending inventory = costs of goods sold (or cost of sales) All of the above are income statement accounts but they get closed out twice. The first time they get closed, they get closed to 0. When it gets on the truck (fob shipping) Fob destination - means that the seller owns the goods until you receive them. Fob shipping - means that you take possession once they are shipped and get on the truck.