A physical count of inventory reveals inventory shrinkage of 1,470. The journal entry to record this reduces the inventory to the physical count using an inventory shrinkage expense account.
A business records an bookkeeping entry for goods given to charity. Since the goods are given free of charge they have no sales value and cannot be recorded as sales and therefore the cost of goods needs to be removed from the purchases account and transferred to a charitable expenses account.
A business records an accounting entry for free samples given to customers. Since the free promotional samples have no sales value they cannot be recorded as sales and therefore the cost of the samples needs to be removed from the purchases account and transferred to a promotional expenses account.
Carriage inward and carriage outward, sometimes referred to as freight inwards and freight outwards, are transportation costs incurred by a business. Freight inwards relates to costs incurred in having goods delivered to the business from suppliers, whereas freight outwards refers to the costs of delivering goods to customers.
The gross profit method calculator works out a products net price after applying multiple trade discounts to its list price. This free Excel calculator also provides a summary showing the original price, total discount, and net price, together with a calculation of the single equivalent rate (SED).
Errors in inventory impact the balance sheet and income statement of a business, but have no effect on its operating cash flow. In the cash flow the change in net income as a result of the inventory error, is compensated for by a change in the movement on working capital.
A business operating a perpetual inventory system needs to record goods received into inventory even if it has not yet received an invoice from its supplier. Since the liability cannot be posted to the accounts payable account, a temporary posting is made to the goods received not invoiced account.