chap 5 notes - b.i interest exp b.ii casualty losses from...

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Multi-step income statement= 1. Gross profit = net Sales- COGS a. Tells whether or not you are profitable from selling products 2. income from operations = gross profit-operating expenses a. how well they are operating 3. net income = +/- results from non-operating activities Sales revenue 1. net sales = sales- sales returns and discounts(contra-rev accts.) Gross profit 1. aka merchandising profit 2. not a measure of overall profit non-operating activities 1. activities that are unrelated to a company’s main line of operations 2. acct names are: a. other revs and gains a.i. interest rev a.ii. dividend rev a.iii. rent rev(subleasing) a.iv. gain from sale of PPE b. other exps and losses
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Unformatted text preview: b.i. interest exp b.ii. casualty losses from recurring shit like vandalism or accidents b.iii. loss from sale of PPE b.iv. loss from strikes by employees for a periodic-COGS= Beginning inv+ cost of goods purchased- Ending inv-COGP(purchased)= purchases – purchase returns –purchase discounts –freight-in Gross profit rate= GP/ net sales-paints a more meaningful picture of whats going on in the sales of a business-how well sales covers just cogs Profit margin ratio= NI/ net sales = % of each dollar of sales that results in NI =how well sales covers all expenses(including cogs)...
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