COMMERCE 1BA3 Lecture Notes - The Royal And Ancient Golf Club Of St Andrews, Purch Group, Combined Gas And Steam
22 Oct 2013
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Chapter 8: reporting and interpreting cost of goods sold and inventory. Merchandising and manufacturing (merchandiser = retailer: sales revenue, cost of good sold, gross profit, operating expenses. Operating income = gross profits operating expenses. Different from net income income tax and interest; ni is the bottom line (after tax figure) Operating income = ebit (earnings before interest and taxes) Inventory asset held for resale or used to produce services and goods for sale. Merchandising firms have only merchandise inventory (buys inventory; sells inventory) Cost included in inventory purchases: the cost principle requires that inventory be recorded at the price paid plus all costs incurred to bring the inventory to saleable conditions. Freight and insurance freight in (transportation paid to obtain goods); freight out (transportation paid to transport goods to customer) Preparation costs eg/ packaging cost, labeling cost etc prepare goods for sale; cut off point (cut off costs) is the point in time when good reaches position to be sold.
