Chapter 5

A brief introduction to inventory, cost of goods sold, and how they relate to each other. This is meant to be a brief overview before we really dive in.

There are a couple of things that can be taken out of sales to get us down to "Net Sales". You'll need to pay close attention, because these exact same things will apply to purchases too.

The two methods of inventory tracking. And, surprise, we're going to talk some more about words.

What in the world does FOB mean? I'm not really sure, but that's ok, you wont miss any FOB questions if you can draw a line.

Transportation in matters, but transportation out never really gets talked about. What's the deal with that?

How can we figure out COGS under the periodic inventory system? By making up a formula, of course.

The Periodic inventory has a couple of drawbacks, which we will discuss here.

The Gross Profit Method is a way to estimate what our Cost of Goods Sold is, without having to do a physical inventory count.

The single step Income Statement is what we're used to dealing with, but the Multistep Statement gives us much more visibility into the information that actually matters.