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Inventory is a balance sheet item. Costs added to inventory stay in inventory until the items are sold. There are many different ways to allocate these costs, at the discretion of the company. When items are sold, an allocation representing these items is moved from inventory to cost of sales (a.k.a. costs of goods sold) which becomes a cost for the period, match against an allocation of revenues for the period, which gives a figure for gross profit. Watch for trends in inventory from period to period, allowing for seasonality, and the gross margin (gross profit as a percent of revenues). The biggest thing to watch for is an unwarranted increase in inventory, which could indicate obsolescence, poor planning, or high returns. If inventories are too high, they are likely eventually to be written off.
What else can I help you with?
1 In comparing the accounts of a merchandising company with those of a service company what additional accounts would the merchandising company likely use assuming it employs a perpetual inventory?
Cost of goods sold and Gross profit
What methods do not require a physical inventory periodic inventory system perpetual inventory method retail method or gross profit method?
periodic inventory system
Inventory turnover ratio affect profit margin?
yes
Which inventory method yields highest gross profit?
FIFO
What is the inventory system in accounting?
Inventory system is more likely recorded in the Balance Sheet section in accounting. It will not be at the Profit and Loss section.
Is an inevtory an asset or liability?
Inventory is a current assets of company because by selling the inventory company earns revenue and generate profit
What effect does an overstatement of inventory have on a company's financial statements?
Overstatement of closing stock will inflate profit and overstatement of opening stock will have an inverse effect.
1 In comparing the accounts of a merchandising company with those of a service company what additional accounts would the merchandising company likely use assuming it employs a perpetual inventory?
Cost of goods sold and Gross profit
What is profit in a company?
profit in a company this is increase in revenue received by the company. profit in a company this is increase in revenue received by the company.
Can a non profit company also be a profit company?
No, a non-profit company cannot also be a profit company. You can only be one or the other and not both.
What methods do not require a physical inventory periodic inventory system perpetual inventory method retail method or gross profit method?
periodic inventory system
Inventory turnover ratio affect profit margin?
yes
Which inventory method yields highest gross profit?
FIFO
Is USAA a non-profit company?
No, USAA is not a non-profit company. It is a financial services company that operates as a for-profit organization.
asset efficiency analysis?
these ratios calculate the amount of revenue contributed by assets of a company. higher ratios imply higher revenue contributed and higher efficiency. some of the ratios calculated here are:a) Inventory turnoverInventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Opening inventory + Closing inventory) / 2b) Receivables turnoverReceivables turnover = Revenue / Average receivablesAverage receivables = (Opening receivables + Closing receivables) / 2
How would effective use of resources contribute to the profit of a business?
How would effective use of resources contribute to the profit of a business?
How would effective use of resources contribute to the profit of a business -?
How would effective use of resources contribute to the profit of a business?
