Accounting: inventory
periodic IS temporary acct: purchases and returns and allowances
A credit balanced contra-purchases acct used for the return of merchandise to suppliers or price reductions given by suppliers
periodic IS temporary acct: purchases discounts
A credit balanced, contra-purchases account used for prompt payment discounts
periodic IS temporary acct: freight in
A debit balanced account for shipping charges paid by purchaser, these charges will cause COG purchased to increase
periodic IS temporary acct: purchases
A debit balanced account used for inventory purchases
FOB shipping point
Buyer pays delivery charges (title to goods transfers at shipping point)
Perpetual inventory system
Continuous record of inventory acquired and sold is maintained in the inventory asset account. It shows the actual quantity and cost of the inventory on hand and COGS account shows total cost of merch sold during he period.
Inventory
Goods that businesses intend to sell to their customers as well as raw materials and in-process items.
Perpetual inventory system were used when
Inventory items were unique or specifically identifiable. More difficult to use in businesses with many identical items
FOB destination
Seller pays delivery (title to goods transfers at destination)
Periodic inventory system
Updates inventory, COGS accounts only once a period rather than continuously. Instead of debiting/crediting inventory, temporary accounts are used