Single step income statement name of the company

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Single step income statement Name of the company Income statement For the year ended (DATE) Rev Sales Less Sale dis Sale return Net sales Interest rev Rent rev Total revenues Expenses Total expenses Income before income tax = Rev - Exp (Income tax) net income
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Revenues include both operating and non-operating revenues (Interest revenue and gains) Expenses include COGS, operating expenses and non-operating expenses(interest expenses and losses) Income tax expense is usually disclosed separately from the other expenses in a single-step stm. Reasons to use single step statement 1) Company does not realize any income until total revenues exceed total expenses 2) Easy to read Multiple step income statement Company name Income statement For the year ended DATE Sale revenue Sales Less Sale discount Sales returns Net sales (COGS) Gross profit Operating expenses: Total operations Income from operations = Gross profit – total operations Other Rev and exp: (Interest expense) Interest revenue Rent revenue Total other rev and exp Income before income taxes = income from operations – total other rev and exp (income tax exp) Net income
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Five main steps in this statement Net sales : Gross sales – less Sales returns and allowances and sales discount Gross profit : Net sales – COGS Income from operations : Gross profit – operating expenses Income before income tax : income from operations + non operating revenues – non operating expenses Net income : Income before income tax – income tax expen ses Gross profit margin and Profit margin: Gross profit margin: Gross profit / net sales Profit margin: Net income / net sales Chapter 6 Goods in transit Goods in transit should be included in the inventory of the company that has legal title to the goods. Any goods owned but in transit at the end of the accounting period, should be included in the final inventory balance by the party that owns them at that time.
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Shipping terms Seller Buyer FOB Destination Inv belongs to the seller until it reaches the buyer’s destination Inv belongs to buyer when it reaches the buyer’s destination FOB shipping point Inv belongs to the seller until it’s shipped Inv belongs to the buyer once the shipment leaves the seller’s place of business Consigned goods Holding goods belonging to the parties and selling them for a fee without ever taking ownership of the goods. Specific identification The specific identification cost formula tracks the actual physical flow of the goods in the perpetual inventory system. Specific identification is appropriate and required for goods that are not ordinarily interchangeable, and for goods that are produced and segregated for specific projects. It must be used if the goods are not interchangeable(if they are unique and can be distinguished from one another) Beginning inventory + Purchases = COGS + Inventory FIFO (First in , First out) If the company cannot use the Specific identification cost of formula then it must use the FIFO or average cost of formula.
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  • Fall '15
  • Revenue, Generally Accepted Accounting Principles, COGS

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