Goods belong to the buyer when they leave the seller's warehouse. Buyer pays for shipping and the shipping cost increases buyer's inventory costs (Purchases 2/14; Goods and Shipping is recognized on 2/14)

All costs incurred in order to prepare inventory to sell. Cost per inventory item - Any discounts + Any shipping, storage, or insurance costs. Total inventory cost should be debited to Merchandise Inventory in the Purchase Cycle

Inventory Cost Equation

Cost per inventory item - Discounts + Other Costs (Shipping, Storage, or Insurance Cost)

Shipping, Storage, Insurance Cost, Import Duties

Specific Inventory Costing Method

Specifically tracks each unique inventory item's cost. Typically associated with larger, easily identifiable items such as vehicles

First In, First Out Costing Method (FIFO)

The first inventory costs that we incur during the purchase cycle are the first costs that we recognize as Cost of Goods Sold expense during the sales cycle

Last In, First Out Costing Method (LIFO)

The most recent inventory costs that we incur during the purchase cycle are the first costs that we recognize as Cost of Goods Sold expense during the Sales Cycle.

Weighted Average Costing Method

All inventory items are combined to get "total inventory cost" and "total number of inventory items". Total Inventory Cost/Total Number of Inventory Items = Weighted Average Cost Per Unit.

Cost of Goods Sold (Expense Account)

Used to recognize the expense associated with inventory sales

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ACCTG 241 Exam 2

Question	Answer
FOB Shipping Point	Goods belong to the buyer when they leave the seller's warehouse. Buyer pays for shipping and the shipping cost increases buyer's inventory costs (Purchases 2/14; Goods and Shipping is recognized on 2/14)
FOB Destination	Goods included in buyer
Inventory Cost	All costs incurred in order to prepare inventory to sell. Cost per inventory item - Any discounts + Any shipping, storage, or insurance costs. Total inventory cost should be debited to Merchandise Inventory in the Purchase Cycle
Inventory Cost Equation	Cost per inventory item - Discounts + Other Costs (Shipping, Storage, or Insurance Cost)
Other Cost Examples	Shipping, Storage, Insurance Cost, Import Duties
Specific Inventory Costing Method	Specifically tracks each unique inventory item's cost. Typically associated with larger, easily identifiable items such as vehicles
First In, First Out Costing Method (FIFO)	The first inventory costs that we incur during the purchase cycle are the first costs that we recognize as Cost of Goods Sold expense during the sales cycle
Last In, First Out Costing Method (LIFO)	The most recent inventory costs that we incur during the purchase cycle are the first costs that we recognize as Cost of Goods Sold expense during the Sales Cycle.
Weighted Average Costing Method	All inventory items are combined to get "total inventory cost" and "total number of inventory items". Total Inventory Cost/Total Number of Inventory Items = Weighted Average Cost Per Unit.
Cost of Goods Sold (Expense Account)	Used to recognize the expense associated with inventory sales

Created by: user-2025452

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