Business Administration 2257 Chapter Notes - Chapter 5: Purchase Order, Perpetual Inventory, Income Statement

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Jordan Sills

Document Summary

Inventory is classified into 3 categories in manufacturing companies: raw materials, work in progress, finished goods. Inventory systems: merchandising companies keep track of their inventory to see what is available to be sold and what has been sold (cogs) Perpetual inventory system: detailed records are maintained for the cost of each product that is purchased and sold, these records continuously (perpetually) show the quantity and cost of inventory purchased, sold and on hand. Ford keeps separate inventory records for each automobile, truck and van on its lot and showroom floor. To adjust for inventory overages: merchandise inventory account debited, cogs credited. Credit purchases are recorded by a debit (increase) to the merchandise account and a credit (increase) to accounts payable: only merchandise purchased for the purpose of selling to customers is recorded in the. Sales taxes: sales tax in canada include the goods and services tax (gst) federal sales tax and.