Business Administration 2257 Chapter Notes - Chapter 6: Financial Statement, Write-Off, Snow Blower
27 Sep 2016
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Taking a physical inventory requires counting, weighing, or measuring each kind of inventory on hand. An inventory account is generally more accurate when a limited number of goods are being sold. Companies often count inventory when the business is slow. Goods in transit should be included in the inventory of the company that has legal title to the goods. Consigned goods an arrangement in which goods are left in the possession of another party to sell. The holder of the goods does not own them. Ownership remains with the individual or company that wants to sell the goods until the goods are actually sold to a customer. Specific identification tracks the actual physical flow of the goods in a perpetual inventory system. Each item of inventory is marked, tagged, or coded with a specific unit cost so that the cost of the ending inventory and the cost of the goods sold can be determined.
