mid term notes - Multi-Step Income Statement Sales-Sales Return\/Allowance-Sales Discount Net Sales-COGS Gross Profit-Operating Exp Income from

mid term notes - Multi-Step Income Statement Sales-Sales...

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Multi-Step Income Statement Sales -Sales Return/Allowance Income before Taxes -Sales Discount - Income Taxes Exp Net Sales Net Income -COGS Gross Profit -Operating Exp Income from Operations (+/-)Other Income/Exp (Gain/Loss) Income before Taxes Perpetual System Merchandise Inventory DR. CR. Freight-In Return/Allowance Discount Periodic System Purchase Purchase Discount DR. Bal. CR. Bal. Freight-In Purchase Return/Allowance DR. Bal. CR. Bal. (Separate Accounts) Calculate COGAS (Cost of Goods Available for Sale) Beginning Inv + Net Purchases COGAS Calculate COGS Beginning Inv + Net Purchases 3-1
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3-2 Financial Accounting Solutions Manual COGAS -Ending Inventory (Physical Count) COGS FOB Shipping Point Freight-In --> Buyer's Cost Buyer pays to get Inv ---> therefore part of Inv cost FOB Destination Freight-Out --> Seller's Cost Selling/Operating Exp (Exp incurred to make a sale) 1/10, n/45 1% Discount if you pay in 10 Days , n = Full Amount "45" -->45 days given to pay whole amount (This is good for the Seller --> they get $$ faster) Shrinkage Definition When peeps be stealin' yo moneyyyyyy or supplies! Relationship between COGS and Ending Inventory Inversely Proportional If COGS increases, End Inv decreases If COGS decreases, End Inv increases Relationship between COGS and Gross Profit Inversely Proportional
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CHAPTER 3 PROCESSING ACCOUNTING INFORMATION 3-3 If COGS increases, Gross Profit decreases If COGS decreases, Gross Profit increases Salvage Amount (or Value) You buy an item and plan on selling it before it depreciates fully. Purchase Cost - Salvage Amount = Total Price/Cost of Item The total cost is what you record. Specialization I.D. Cost Flow = Physical Flow Specific options of a common product Not popularly used . ex: There are a bunch of blue cars, but each blue car is different, has a different I.D. number/code. That type of situation is what Specialization I.D. is used for. Average Cost According to Wikipedia: Average Cost = Unit Cost = Total Cost # of Goods Produced Easy to use Objective Less Subject to Manipulation FIFO First In, First Out An approximation of physical flow of goods ----> cost flow parallels physical flow Less Subject to manipulation than Specialization I.D. LIFO Last In, First Out Tax Benefits Matching Principle Goods on Consignment Inventory that someone is selling on the behalf of someone else without taking ownership.
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3-4 Financial Accounting Solutions Manual Cost Flow Assumptions Specialization I.D. FIFO LIFO Average Cost Which Cost Flow Assumption produces same answer for both Periodic and Perpetual Systems? FIFO Periodic FIFO = Perpetual FIFO Calculate Net Purchase Purchase -Returns -Discounts Net Purchase Calculate Gross Profit Sales Revenue -COGS Gross Profit Conservatism Principle Keeps assets from being over estimated. Lower of Cost or Market Valua- tion ex: Inv Categories Cost Data Market Data Cameras $12,500 $13,400 Camcorders $9,000 $9,500 DVD's $13.000 $12,800 Choose the lowest values out of Cost Data and Market Data and then add them together for the LCM.
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  • Fall '10
  • MANAGE
  • Balance Sheet, Sales, Generally Accepted Accounting Principles, liabilitys, FINANCIAL ACCOUNTING SOLUTIONS, PROCESSING ACCOUNTING INFORMATION

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