BU127 Chapter Notes - Chapter 8: Customer Satisfaction, Gross Profit, Retained Earnings
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BU127 Full Course Notes
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Reporting and interpreting cost of sales and inventory. Stock out: small production of highly demanded product causes loss in revenue and potential customer dissatisfaction. Over stock: large production of poorly demanded items increases storage costs and interest on short term loans. 1. provide accurate information to prepare statements and report tax. 2. provide up to date inventory quantities and costs. 3. provide necessary information to protect and control assets. Inventory is a tangible current asset: held for sale or used for production. Items acquired from purchase, growth or extraction for processing into finished goods. Work in progress inventory: raw materials in production process. Finished goods inventory: manufactured goods complete and ready for sale. Cost principle: inventory is recorded at cash equivalent. Inventory costs: sum of all expenditures and charges directly or indirectly incurred in making a saleable article in condition and location. When goods are sold, merchandise inventory is decreased and cos.
