Accounting Review - Perpetual Inventory System and Accounting Entries

This set of flashcards highlights key concepts, terms, and accounting entries related to the Perpetual and Periodic Inventory Systems, focusing on account management and transactions.

COGS (Cost of Goods Sold)

Refers to the direct costs attributable to the production of the goods sold by a company.

Perpetual Inventory System

An accounting method that continuously updates inventory records as purchases and sales occur.

Periodic Inventory System

An accounting method where inventory is only counted at the end of a period.

Sales Tax

A liability that represents an obligation to pay government taxes on sales until the payment is made.

FOB Shipping Point

Ownership of goods transfers to the buyer at the shipping point, and the buyer pays for shipping costs.

FOB Destination

Ownership of goods transfers to the buyer upon delivery, and the seller bears the shipping costs.

Freight In Account

An account used to record transportation costs incurred to bring inventory to the business.

Cost of Goods Purchased

Total expenses incurred to acquire goods for sale, including purchases and freight costs, minus returns and discounts.

Cost of Goods on Hand

The total cost of inventory that is physically counted and valued at a given point in time.