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Perpetual Inventory - Freight Costs definitions Flashcards

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Perpetual Inventory - Freight Costs definitions
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  • Freight Costs
    Delivery expenses incurred to transport goods, which may be paid by either the buyer or seller depending on delivery terms.
  • FOB Shipping Point
    Transfer of goods' ownership occurs at the seller's location, making the buyer responsible for shipping costs and risks during transit.
  • FOB Destination
    Transfer of goods' ownership occurs at the buyer's location, making the seller responsible for shipping costs and risks until delivery.
  • Inventory Account
    Asset account reflecting the value of goods held for sale, including purchase and, in some cases, delivery costs.
  • Capitalization
    Process of recording a cost as part of an asset's value rather than as an immediate expense.
  • Selling Expense
    Cost associated with delivering goods to customers, recorded when the seller pays for shipping under certain terms.
  • Accounts Payable
    Liability account representing amounts owed to suppliers or service providers, such as for inventory or delivery fees.
  • Ownership Transfer
    Point at which legal title and responsibility for goods shift from seller to buyer, determined by shipping terms.
  • Asset
    Resource with economic value, such as inventory, expected to provide future benefit to a business.
  • Liability
    Obligation to pay debts or provide services, such as amounts owed for inventory or delivery services.
  • Journal Entry
    Formal accounting record documenting the financial impact of transactions, including inventory purchases and freight costs.
  • Delivery Expense
    Cost incurred to transport goods to a buyer, which may be treated as a selling expense or added to inventory.
  • Balance Sheet
    Financial statement showing a company's assets, liabilities, and equity at a specific point in time.
  • UPS
    Example of a third-party shipping company used to illustrate freight cost transactions in accounting scenarios.
  • Cash
    Asset account representing currency or funds available for immediate use, often used to settle accounts payable.