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19 Cards in this Set
- Front
- Back
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FOB shipping point
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ownership passes to buyer as soon as it leaves warehouse
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FOB destination point
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ownership transfers to buyer when goods are received
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Inventory Formula
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Beg Inventory
+ Net Purchases -->Cost of Goods Availabe for Sale - Ending Inventory --> COGS |
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Net Purchases Formula
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Purchases
- Purchase Returns - Purchase Discounts + Freight In --> Net Purchases |
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Freight In
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cost of transporting inventory purchases
added in net purchases NOT same as frieght out |
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Freight Out
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shipping to customers upon agreement
expense account |
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avg collection period formula
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365 / accounts receivable turnover ratio
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FIFO
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oldest inventory purchased first to be sold
ending inventory is the cost of the most recent inventory |
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LIFO
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most recent inventory first to be sold
ending inventory is cost of oldest inventory |
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Weighted Avg
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all inventory has same cost
COGAFS / UAFS = WA cost per unit |
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consistency principle
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requires that companies use the same accounting methods period after period so they can be comparable
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inventory turnover ratio
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mesaures the number of times on avg the inventory is sold during the year
higher is better |
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inventory turnover ratio formula
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COGS / Avg invetory
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avg inventory formula
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inventory at Jan 1 + inventory at dec 31 / 2
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number of days sales in inventory
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measures the number of days on avg between buying the inventory from supliers and selling it to customers
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number of days sales in inventory formula
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365 / inventory turnover
lower is better |
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gross margin rate
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measures the percentage of the sales price of inventory that is gross profit
higher is better |
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gross margin rate formula
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gross profit / net sales rev
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Accounts receivable turnover ratio formula
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Sales revenue / Average accounts receivable
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