Merchandising and inventory Flashcards
Goods purchased for resale at a profit
-Ex. Caskets, urns, jerwlery
Merchandise/ inventory
An expense account to record the buying of merchandise for resale
Purchases
- Contra purchases account
-Record the return of merchandise to the manufacturer or supplier
-Usually defects in workmanship and/ or inferior product quality
Purchases returns and allowances
-Contra purchase account
-Record discount taken on inventory purchases
-Encourage prompt payment of their invoice
Purchase discounts
Purchases - any returns - any discounts
Net purchases
A revenue account to record the earnings of revenue
Sales
-Contra sales account
-Records credit given to a customer
-Usually shortages or damaged goods
Sales returns and allowances
-A contra sales account
-Records discounts given to a customer
-Incentive for prompt payment
Sales discounts
Sales - sales returns - sale discounts
Net sales
If someone receives a discount of 6/15, n/30 what does all of that mean
6/15 means that they would receive a 6% discount if they pay within the first 15 days and n/30 means that the payment is due within 30 days
When goods are shipped, the ownership is transferred when they are delivered
FOB destination
When goods are shipped, ownership is transferred when they are shipped
FOB shipping
What is the inventory equation for calculating COGS
COGS = beg year inventory + inventory purchases - end inventory
-Does not maintain a continual track of inventory levels and COGS
-Focus: how much did we start with, how much purchased, how much ended with?
-Inventory costing done periodically when physical count is done
Periodic inventory
-Continual track of inventory and calculations of COGS
-Efficient management
-Focus: let the computers work
-Continuous inventory costing at each sale
Perpetual inventory