BUSI 1101 Study Guide - Final Guide: Book Value, Contingent Liability, Electronic Funds Transfer
Document Summary
Adjusting entries: what is an account, what should be in the account, prepared an adjusting entry. Only know the inventory when it is counted at the end of the billing date. Fob shipping point: buyer owns it once it is shipped (buyer pays for shipping) Fob destination: buyer owns it once it is received (seller pays shipping) Freight out or shipping cost is an operating expense. Perpetual- two entries; sales and cost of goods sold. 6 fifo: first in, first out (focus on detail) Units available for sale = weighted average unit cost. Must recalculate weighted average unit cost every time there is a new purchase. If ending inventory is too low, cost of goods sold will be too high and gross profit will be too low the next year. Retained profit is before tax is inventory is. If it takes longer to sell, it has bad liquidity. Independent checks of performance (internal/external reviews) inventory turnover=cost of goods sold.
