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Lecture Notes for ACIS 2115 - Principles of Accounting with Yardley at Virginia Tech (VT)

Notes Information

Material Type:Class Note 3
Professor:Yardley
Class:ACIS 2115 - Principles of Accounting
Subject:Accounting & Information Systems
University:Virginia Polytechnic Institute And State University
Term:Fall 2007
Keywords:
  • Asset Source
  • Asset Exchange
  • Following Transaction
  • Claims Exchange
  • Cash Transaction
  • Following Financial Statements
  • Following Cash Flow
  • Period Costs
  • Product Costs
  • Cash Expenses
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Sample Document Text

ACIS 2115 Review Product Costs Examples: • • • • • Cost of Good Itself Shipping & Handling Transportation-In Transit Insurance Storage Costs Product Costs Example: You buy inventory for $100. You pay $20 to have it delivered. Journal Entry: Inventory 120 Cash 120 Example Continued: You sell this inventory for $150 and receive cash. (Assume a perpetual inventory system.) Journal Entry: Cash 150 Revenue Product Costs 150 Cost of Goods Sold 120 Inventory 120 Period Costs Examples: • • • • • Advertising Administrative Salaries Sales Commissions Insurance (other than transit) Interest Period Costs Example: A company owes $10,000 to a marketing firm for an advertising campaign. • Journal Entry: Advertising Expense 10,000 Accounts Payable 10,000 Product vs. Period Costs When do you expense a product cost? When you sell the inventory When do you expense a period cost? In the period in which it is incurred Product vs. Period Costs The gist: A product cost is not immediately expe...

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