MGAC01H3 Chapter Notes - Chapter 8: Perpetual Inventory, Accounts Payable, Subledger
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If it is discretionary by the supplier, no rebate is recognized until it is paid or supplier becomes obligated to make a payment. o. If it is probable and the amount can be estimated, the asset recognition criteria are met and the receivable can be recorded. It is recognized as a reduction in the cost of purchases. Purchases of merchandise for resale or raw materials for production are debited to inventory rather than to purchases. Inventory is a control account that is supported by a subsidiary ledger of individual inventory records. 1: the balance sheet cost of ending inventory is not a fair representation of the recent cost of inventories on hand. In almost all situations, lifo does not represent the actual flow of costs: use of lifo can result in serious distortions of reported income, especially when old inventory cost layers are expensed in the period.
