p 18 - perpetual system p 20 6.

FOB: free-on-board FOB destination: when the goods are on a third party vehicle, they belong to the sellers. [if today is the year end date, we recognize the revenue next period] FOB shipping: when the goods are on a third party, they belong to the buyers. --> distinguish between these terms determines the time to recognize the revenue p 24 * historical cost concept - as we pay less, we adjust the cost of inventory to avoid overstating the asset value p 26 purchase allownace: there are some defects in stock but we don't want to return -> we ask for a discount p 29 purchase discount: 2% p 30 delivery cost of purchase inventory if the good (with delivery cost of the purchase inventory) is not yet sold, only affect the Inventory account if the good (with delivery cost of the purchase inventory) is sold, COGS rises -> affect gross profit in Income Statement p 31 historical cost principle: include other necessary cost e.g. tax, freight cost, agent fee, document fees