AFM123 Chapter Notes - Chapter 7: Finished Good, Current Asset, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM123
• Professor: Hector Gamez

Document Summary

Maintain a sufficient quantity of inventory meets customers" needs. Ensure inventory quality meets customers" expectations and company standards. Minimize the cost of acquiring and carrying inventory. Merchandise inventory: products of finished condition, ready for sale without further processing. Raw materials inventory: products such as plastics, steel, fabrics. Work in progress inventory: includes goods that are in the process of being manufactured. Finished goods inventory: goods ready for sale just like merchandise inventory. Consignment inventory: refers to goods a company is holding on behalf of the goods" owner. Typically arises when a company is willing to sell the goods on behalf of the owner (for a fee) without taking ownership of the goods due to the difficulty of sale. Consignment goods are reported on the balance sheet of the owner. Goods in transit: are inventory items being transported. Fob destination: ownership of goods changes to the customer when the goods arrive.