2001+chapter+6+student+version

2001+chapter+6+student+version - Chapter 6: Merchandise...

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1 Chapter 6: Merchandise Inventory, Cost of Goods Sold, and Gross Profit Accounting for Inventory Inventory Costing Effect of Errors on Financial Statements Accounting Principles and Inventories Multiple Step Income Statement Ratios
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2 Inventory Terminology __________- the merchandise that a company sells to customers ____________- the cost of the inventory that the business has sold Inventory is the _____ and Cost of Goods Sold is the _______ ________________ is the excess of sales revenue over the cost of goods sold
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3 Sales revenues – Cost of goods sold = Gross profit (before operating expenses) Gross profit – Operating expenses = Net income Gross Profit (Gross Margin)
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4 Balance Sheets Current assets: Cash $X Short-term investments X Accounts receivable, net X Prepaid expenses X Service Company Century 21 Real Estate Balance Sheet Year Ended December 31, 20xx Current assets: Cash $ X Short-term investments X Accounts receivable, net X Inventory 11 Prepaid expenses X Merchandising Company General Motors Corporation Balance Sheet Year Ended December 31, 20xx
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5 Income Statements Service revenue $XXX Expenses Depreciation expense X Income tax expense X Net income $ X Service Company Century 21 Real Estate Income Statement Year Ended December 31, 20xx Sales revenue $185 Cost of goods sold 146 Gross profit 39 Operating expenses: Salary expense X X Income tax expense $ X Net income $ 4 Merchandising Company General Motors Corporation Income Statement Year Ended December 31, 20xx
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2001+chapter+6+student+version - Chapter 6: Merchandise...

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