Lecture 6 - Student 2pp

Lecture 6 - Student 2pp - RETAILING OPERATIONS (Including...

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RETAILING OPERATIONS (Including GST) Developed by John Wiley Ltd Adapted by Abdul Razeed Chapter 5 | STUDENT Accounting 1A | ACCT 1001) § 1. Account for the purchase of inventory and GST § 2. Account for the sale of inventory and GST § 3. Use ratios to evaluate a business § 4. Adjust and close the accounts of a retailing business § 5. Calculate cost of sales in a periodic inventory system § 6. Prepare a retailer’s financial statements § * DENOTES SLIDES WITH MISSING DETAILS TO BE FILLED IN LECTURES Learning Objectives
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LO1-Type of Business Operations › Service firms- - Provide service(s) to customers - e.g. accountants, lawyers › Manufacturing firms- - Purchase raw materials and convert them to finish products and then sell these finished goods - E.g. car manufacturers › Merchandising (or retail) firm- - Businesses buy and resell inventory - E.g. Departmental Stores, Newsagents LO1-Merchandising Operations › The assets that a merchandising business buys and sells are known as Inventory › Inventory is also knows as goods, merchandise, stock or trading stock › Revenues = “Sales Revenue” › Items that are returned are records in a contra-revenue account called “Sales returns and allowances”
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LO1-Merchandising Operations › Sales Revenue less Sales returns and allowances = Net Sales › Inventory is often classed as current asset › When inventory is sold, it is recorded as “Cost of Goods Sold” which is an expense account › Merchandising (or retail) firms have two types of expenses: - Cost of Goods Sold - Operating expenses (includes various selling, operating and financing expenses) Service Firm Income Statement Year ended June 30, 20XX Service revenue $xxx Expenses: Salary expense x Depreciation expense x Income tax expense x Net profit $ xx Retailing Firm Income Statement Year ended June 30, 20XX Sales revenue $xxx Cost of goods sold x Gross profit xx Operating expenses: Salary expense x Depreciation expense x Net profit $ xx LO1- Income Statements
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LO1- Operating Cycle of a Retailing Business LO1-Inventory Systems* › A business must choose whether to use a Periodic or a Perpetual inventory system. Key features are: No current information in GL – must calculate how much stock has been sold Cost of Goods Sold a/c provides a constant up-to-date record of cost of stock sold Cost of Goods Sold (expense) Inventory a/c Returned (by customer) Inventory a/c Sold Purchase Returns and Allowances a/c Inventory a/c Returned (to supplier) Purchases a/ c Inventory a/c Bought When inventory is No current information in GL – must do a stock-take to see how much stock on hand Inventory a/c provides a constant, up-to-date record of stock on hand Cost of inventory on hard (asset) Periodic System Perpetual System
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LO1-Inventory Systems › Perpetual System - Detailed inventory system in which the cost of inventory is maintained - Records continuously show the inventory that should be on hand - e.g. car dealerships, furniture stores - Use of bar codes and optical scanners has led to wide use
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This note was uploaded on 08/18/2011 for the course ACCT 1001 taught by Professor Luder during the Three '08 term at University of Sydney.

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Lecture 6 - Student 2pp - RETAILING OPERATIONS (Including...

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