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211c7m1 - Introduction to Financial Accounting Chapter 7...

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Introduction to Financial Accounting AMIS 211 – Professor Marc Smith 1 Chapter 7, Module 1 Chapter 7, Module 1 Slide 1 AMIS 211 Introduction to Financial Accounting Professor Marc Smith Chapter 7 Module 1 Chapter 7 Module 1 Hi everyone. In this chapter we are going to talk about an issue that is very important and has a very important impact on a company’s financial statements. Now, please go to the next slide and let’s go ahead to the next slide.
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Introduction to Financial Accounting AMIS 211 – Professor Marc Smith 2 Chapter 7, Module 1 Slide 2 Chapter 7 Module 1: Sales of our Product Sales of our Product Question: Which financial statement accounts are affected? Income Statement Balance Sheet 1. Sales Revenue 1. Accounts Receivable 2. Cost of Goods Sold 2. Inventory And, the issue that we are going to deal with is sales of our product—sales of our inventory to our customers. And, the first question that we have to answer is this: What financial statement accounts are affected when we have sales of our product? The accounts that are affected on the financial statements: On the Income Statement: we have to record the Sales Revenue—the revenue earned from selling the product; and the Cost of Goods Sold (CGS)—the cost of the inventory sold to customers. On the Balance Sheet: we have to record the Accounts Receivable that we get from selling the goods; and we have to reduce the inventory to reflect the fact we no longer own it. In this chapter—in this particular chapter—we will focus on those two right there. We will focus on the Sales Revenue and the Accounts Receivable.
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