Burkhart-Accounting P&G

Burkhart-Accounting P&G - Burkhart 1 Brittany...

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Burkhart 1 Brittany Burkhart Professor Weaver Intermediate Accounting Proctor and Gamble Problems Chapter 4 Questions (a) What type of income statement format does P & G use? Indicate why this format might be used in present income statement information. The income statement is a condensed multiple-step form. Because they could not present all of the details in a single statement due to extensive length, they use this format (Kieso 133). Companies may consolidate their financial statements and then make supplementary schedules to support the totals on the condensed income statement (Kieso 133).When reading the income statement; a person must pay careful attention to the supporting schedules (Kieso 133). Consolidating reduces the income statement to the few necessary lines (Kieso). A supporting schedule often shows different types of related expenses, salaries, and commissions. The majority of P&G’s revenue comes from sales of inventory, which includes shipping and handling costs that are normally incorporated into the list price to the purchaser (Kieso 211). The company recognizes revenue when the transfer of title, ownership, and risk of loss are transferred to the customer (Kieso 211). This normally occurs on the day when the product is shipped (Kieso 211). When there is a discount or return allowance, it is actually recorded as reduction to sales during the same period that the revenue was recognized (Kieso 211). They also offer trade promotions, which can be a special discount price or incentive that is normally offered wholesalers, retailers, or in P&G’s case customers and consumers (Business 1). P&G offers trade
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Burkhart 2 promotions through the form of pricing allowances, merchandising funds, and consumer coupons (Kieso 211). Sales are recorded as net of trade promotion amounts (Kieso 211). These trade promotions are recorded as the costs are incurred, which is usually at the time of sale (Kieso 211). Arrangements to receive the revenue normally have conditions of one year (Kieso 211). Expected payouts, or accruals, are included as accrued marketing and promotion in the balance sheets under accrued and other current liabilities (Kieso 211). Accrued simply means that the amount is earned in the current accounting period but it will not be received until a different accounting period (Business 1). The company recorded operating revenue in the amount of 9,827 dollars (Kieso 211). Calculations were attained by taking their net sales and subtracting their cost of goods sold and selling, general, and administrative expenses (Kieso 206). Fortunately, the amount of operating income has increased each year since 2002 (Kieso 206). The company also has a bit of other non-operating income displayed at net value (Kieso 206).It
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Burkhart-Accounting P&G - Burkhart 1 Brittany...

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