BUSI 353 Final Exam Update

BUSI 353 Final Exam Update

BUSI 353 Final Exam
Perpetual Inventory
- An inventory determined by keeping a continuous record of increases, decreases, and
the balance on hand of each item of merchandise.
Periodic Inventory
- an inventory system in which cost of goods sold is calculated at the end of the period,
rather than every time a sale is madeBrainpower
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Periodic Inventory Method
Beginning Inventory + Net Purchase = COGAS - Ending Inventory = COGS
Why is perpetual system a better system than periodic
- It accounts for the expected and COGS, and can show the shrinkage, whereas
a periodic system only shows the COGS
Shrinkage
- Inventory losses that occur as a result of theft or deterioration.
Weighted Average Method
An inventory costing method based on the weighted-average cost per unit of inventory
that is calculated after each purchase. Weighted-average cost per unit is determined by
dividing the cost of goods available for sale by the number of units available.
specific identification method
inventory costing method that matches or identifies each unit of inventory with its
cost
FIFO method
an inventory costing method that assigns the most recent costs to ending inventory
- FIFO yields higher inventory numbers than weighted average
Net Realizable Value
Expected selling price (value) of an item minus the cost of making the sale.
Consignment In
- Goods are physically in your warehouse but you do not legally own them
Consignment Out
- Goods are legally owned, but are not physically present
Items to include in inventory cost
- non-refundable tax (PST)
- transport and handling
- discounts and rebates
Items excluded in cost of inventory
- abnormal amounts of waste material
- storage cost unless its necessary to move WIP to the next stage
- commissions
- administrative overheads
- selling costs