ACC 110 Chapter Notes - Chapter 7: Inventory Control, Accounts Payable, Cash Flow

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Inventory: asset held for sales or assets used to produce goods that will be sold as part of the entity"s normal business activities. Include materials and supplies used to provide a service to customers. Raw materials: the inputs into the production process. For example, raw materials inventory for a furniture manufacturer includes wood used to build the furniture. Work-in-process (wip): inventory that partially completed on the financial statement data. Finished goods: inventory that has been completed and is ready for sale. One entity"s inventory is another"s equipment and one entity"s finished good is another"s raw material. Perpetual inventory control system: keeps an ongoing tally of purchases and sales of inventory, and the inventory account is adjusted to reflect change as they occur. It can determine cost of sales at any time. Accounts payable (liability +) or cash (asset -) When inventory is sold then record journal as: Dr. cash (asset +) or accounts receivable (asset +) xxx.

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