Inventory Basics – Taking Inventory and the Periodic Inventory System
Questions to focus on:
- How do we calculate the Cost of Goods Sold in a business that utilizes the periodic system?
- What makes up the cost of goods purchased?
- What are the key journal entries one should be familiar with in the periodic system?
- What types of business would use the periodic system?
- What has enabled more companies to move to the perpetual system?
Determining ownership of inventory – FOB shipping point vs. FOB destination
Calculating the Cost of Goods Sold: BEGINNING INVENTORY + COST OF GOODS PURCHASED –COST OF GOODS AVAILABLE FOR SALE – ENDING INVENTORY = COST OF GOODS SOLD