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Lecture 1

COMMERCE 1AA3 Lecture Notes - Lecture 1: Root Mean Square

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Emad Mohammad

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Monday, October 23, 2017
Lecture 1
Inventory & Cost of Goods Sold!
-Inventory is an asset held for resale or used to produce services and goods for sales. !
-Merchandising firms have only merchandise inventory !
-Manufacturing firms have three types of inventory: (Not on Exam)
Raw materials !
Work in process!
Finished goods!
-Ex. Demo car at dealership? Yes/No!
No, because it will not be sold right away, its a long-term asset!
Journal Entry for the sale of Demo: !
#Sales revenue# # # # xx# !
#Disposal of long-term asset# # # xx!
Costs included in Inventory:
-The cost principal requires that inventory be recorded at the prices paid plus all
costs incurred to bring the inventory to saleable conditions.!
Invoice price!
Freight and insurance!
Inspection cost!
Preparation costs!
Purchases Returns and Allowance:
-When customers are sold damaged merchandise, they can either!
Return the merchandise and receive full refund: Sales return!
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