COMMERCE 1AA3 Study Guide - Final Guide: Financial Statement, Combined Gas And Steam, Purch Group
12 Dec 2016
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Chapter 6: inventory & cost of goods sold. Sales revenue is reduced by (contra-revenues accounts: credit card discounts, sales returns and allowances, sales discounts (cash discounts): discounts given to customers to encourage early payment. Income from continuing operations xx xx xx (xx) xx (xx) xx (xx) xx (xx) xx xx xx. Inventory: inventory is an asset held for resale or used to produce services and goods for sale. Manufacturing firms have three types of inventory: raw materials, work in process. The cost principle requires that inventory be recorded at the price paid plus all costs incurred to bring the inventory to saleable conditions, including: invoice price, freight and insurance, inspection costs, preparation costs. Purchases returns and allowances: when customers are sold damaged merchandise, they can either. Return the merchandise and receive full refund: sales returns. Keep the merchandise, but receive some credit (either reduction in a/r, store credit, or cash): sales allowances.
