BU127 Lecture 9: SUMMARY SHEET
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BU127 Full Course Notes
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Periodic: this delays the updating of inventory & cogs until the end of the period. Leads to misstating of inventory during the specified period. Inventory quantities are not maintained on a continuous basis, they are determined at the end of each reporting period by a physical count. Sales return & allowances (dr sales r/a, cr a/r) Purchase return & allowances (dr a/p, cr purchase r/a) Assumes all goods available for sale are similar. Cost of inventory = average cost of all goods currently available for sale. Cost of earliest good purchased is recognized when something is sold. The cost of latest good purchased is recognized as ending inventory. Beginning iventory + cost of goods purchased ending inventory = cost of goods sold.
