MGCR 211 Lecture Notes - Lecture 9: Consignee, Income Statement, Current Asset
5 Oct 2016
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Document Summary
Service companies perform services as their primary source of revenue. Merchandising companies buy and sell inventory: retailers sell to consumers, wholesalers sell to retailers, manufacturers produce goods for sale. For retailers, manufacturers and wholesalers, inventory is a significiant current asset and the largest asset to be converted into cash within next year. Management"s objective is to sell inventory at a higher price than it was purchased for. This involves : selecting appropriate suppliers, determining necessary inventory levels and avoiding stock outputs, pricing for profit, protecting inventory. Merchandiser"s and retailer"s inventory consists of finished goods that have been purchased for resale. Manufacturers inventory may consist of: raw materials, work in process, finished goods. Goal: reduce the time between acquidition of inventory and collection of cash. When dealing with inventory it is important to determine who has the ownership in an objective manner. A key factor in determining inventory ownership is who has title to the goods.
