7 Flashcards
What is merchandise inventory?
All goods that a company owns and intends to sell.
What does FOB shipping point mean?
The buyer owns the goods in transit.
What does FOB destination mean?
The seller owns the goods in transit.
Who includes the goods in inventory, the consignor or the consignee?
The consignor.
What happens to damaged or obsolete goods that cannot be sold?
They are not reported in inventory.
How are damaged or obsolete goods that can be sold reported?
They are reported at net realizable value.
What is net realizable value?
Sales price minus the cost of making the sale (COGS).
When is a loss reported for damaged or obsolete goods?
In the period the damage or obsolescence occurs.
What costs are included in inventory?
All costs necessary to bring an item to a salable condition and location.
What does First-In, First-Out (FIFO) assume?
Inventory items are sold in the order acquired.
What happens when sales occur under FIFO?
The cost of the earliest goods acquired are charged to cost of goods sold.
What remains in ending inventory under FIFO?
The costs from the most recent purchases.
