Purchase Commitments Accounting

Accounting for purchase commitments involves accruing for potential losses which arise when a business has contracted to purchase goods at a price which is higher than the current market value of the goods.

Purchase Commitments Accounting June 28th, 2017Team
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Carriage Inwards and Carriage Outwards

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.

Carriage Inwards and Carriage Outwards November 6th, 2016Team
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Gross Profit Method Calculator

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).

Gross Profit Method Calculator November 6th, 2016Team
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Effect of Inventory Errors

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.

Effect of Inventory Errors November 6th, 2016Team
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Goods Received Not Invoiced

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.

Goods Received Not Invoiced November 6th, 2016Team
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Ending Work in Process

At the end of an accounting period a manufacturing business will have goods which are only partially completed. These goods will be included in the balance sheet current assets as work in process (WIP), under the heading of inventory. Work in process is sometimes referred to as work in progress.

Ending Work in Process March 10th, 2017Team
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Inventory Count Sheet Template

This free inventory count sheet template can be used by a business to produce inventory count sheets for recording the results of a physical inventory count at the end of an accounting period. Free PDF download.

Inventory Count Sheet Template November 6th, 2016Team
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Gross Profit Method of Estimating Inventory

In the absence of a physical inventory count at the end of an accounting period, the gross profit method is a method of estimating the value of ending inventory using historical gross profit percentages.

Gross Profit Method of Estimating Inventory November 6th, 2016Team
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Specific Identification Inventory Method

The specific identification inventory costing method is a way of determining the cost of goods sold and the value of the ending inventory. Under the specific identification inventory method, it is assumed that each unit of inventory can be identified and traced from purchase to sale.

Specific Identification Inventory Method November 6th, 2016Team
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