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That's not true. That's actually the correct way of doing it. When you purchase your inventory you should Dr. inventory & Cr. Your payable and Dr. COGS and Cr. Inventory when you sold the goods

You need to understand the relation between AP, inventory and COGS. Draw a T a/c of AP & inventory. With limited info, you have to assume on the BALANCES.

1. Disbursement of 1,050
Dr. INVENTORY;...

The Average method is actually a "weighted" average method, meaning you have to divide the total value (quantity x unit cost) with the total quantity instead of just adding the 3 prices (5+6+7) &...

a. Inventory is valued at cost & so does COGS. The first value in the sentence is just trying to confuse you on the concept. Profit is the different between values at retail - the COGS. So, to get...

I have my doubt on this issue & is away from my accounting theory books. Here's the thing, Supposed that you have raised a purchase order for an item that is your merchandise inventory to your...