MGAB01H3 Chapter 6: Chapter 6 notes

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9 Jan 2011
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MGAB01H3 Full Course Notes
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MGAB01H3 Full Course Notes
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Counting should take place in teams of two. Prenumbered inventory tags should be used to ensure that all inventory items are counted and that none are counted more than once. N goods in transit should be included in the inventory of the company that has legal title to the goods consigned goods goods shipped by consignor, who retains ownership, to party called consignee, who holds goods for sale. Perpetual system first in, first out (fifo) N average cost formula formula that assumes that goods available for sale are homogenous or non-distinguishable; cogs and ending inventory are determined using average cost, calculated by dividing cost of goods available for sale by units. Fifo provides a better balance sheet valuation than does average. Statement of earnings effects error in ending inventory will have a reverse effect on net earnings of the next accounting period if it is not found and corrected.

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