This document discusses accounting concepts related to merchandising operations and the multiple-step income statement. It defines key terms like cost of goods sold, gross profit, and profit margin ratio. It explains the differences between perpetual and periodic inventory systems, and how to record purchases, sales, returns, and discounts under each. The document also distinguishes between single-step and multiple-step income statements and discusses factors that affect profitability.
This document discusses accounting for merchandising operations under a perpetual inventory system. It provides examples of recording purchases, sales, returns and allowances, discounts, and the flow of costs. Purchases are recorded by debiting merchandise inventory and crediting accounts payable. Sales are recorded by debiting cost of goods sold and crediting merchandise inventory, and by crediting sales revenue and debiting accounts receivable. Returns are handled through contra accounts like sales returns and allowances that are debited. Discounts are also treated as contra revenue accounts. The document explains the key steps in the accounting cycle for a merchandising business.
This document provides an overview of corporation accounting, including:
1) It discusses the process of forming a corporation through incorporation and securing equity financing through the issuance of stock. Some key advantages and disadvantages of the corporate form are outlined.
2) It covers different financing options like debt versus equity, and how stocks work on private and public corporations. The roles of common stock and preferred stock are defined.
3) Key terms related to stock like authorized shares, issued shares, outstanding shares, and treasury stock are explained.
The document provides information about downloading the solutions manual for Accounting Principles Weygandt 11th Edition, including instructions for accessing a sample chapter. It outlines the chapter contents, including learning objectives, assignments, and problems. Tables provide details on the assignment classification, characteristic, and Bloom's taxonomy correlation for the chapter material. The solutions manual appears to provide answers to accounting questions and problems to help students learn the recording process concepts covered in the textbook.
Bab 5 - Balance Sheet and Statement of Cash Flowsmsahuleka
The document discusses the balance sheet and statement of cash flows. It provides learning objectives about understanding the uses and limitations of the balance sheet, identifying major classifications of the balance sheet, and preparing and understanding the statement of cash flows. Key topics covered include the purpose, content, format, and usefulness of the balance sheet and statement of cash flows.
Accounting for Partnership Formation.pdfLENY BARROGA
This document discusses accounting for partnership formation. It covers the capital structure of a partnership, including each partner having individual capital, drawing, receivable, and payable accounts. It provides an example of three partners - Bon Hok, Dyon Ok, and Meow Meng - forming a partnership by contributing cash and assets. The contributions and ownership percentages are listed. Journal entries are prepared for various partnership transactions, including partner contributions, withdrawals, purchases/payments, borrowings, and profit distributions. Finally, it briefly outlines three cases for partnership formation: two or more individuals forming a partnership, a sole proprietorship partnering with an individual, and two sole proprietorships forming a partnership.
This document provides an overview of key learning objectives and concepts to be covered in a chapter on income statements and related information. The chapter will cover understanding the uses and limitations of income statements, their content and format, how to prepare them, and how to report various items. It will also cover earnings per share information, intraperiod tax allocation, accounting changes and errors, retained earnings statements, and other comprehensive income. The document outlines these learning objectives and concepts through a series of slides, providing definitions, examples, and illustrations.
Bab 8 - Valuation of Inventories, a Cost-Basis Approachmsahuleka
This document discusses key concepts related to inventory valuation using a cost basis approach. It identifies major classifications of inventory, distinguishes between perpetual and periodic inventory systems, and describes how different cost flow assumptions like FIFO, LIFO, and average cost affect the valuation of inventory and calculation of cost of goods sold. The learning objectives cover inventory classification, the costs included in inventory valuation, LIFO reserves and liquidations, advantages and disadvantages of different methods, and why companies select certain valuation methods.
Lecture 18 revenue cycle - accounting information systesm james a. hall boo...Habib Ullah Qamar
Chapter 4 Accounting information system, the revenue cycle, overview, three key processes, physical system, Sales order processing, sales return processing, cash receipts and controls over revenue cycle
This document discusses accounting for merchandising operations under a perpetual inventory system. It provides examples of recording purchases, sales, returns and allowances, discounts, and the flow of costs. Purchases are recorded by debiting merchandise inventory and crediting accounts payable. Sales are recorded by debiting cost of goods sold and crediting merchandise inventory, and by crediting sales revenue and debiting accounts receivable. Returns are handled through contra accounts like sales returns and allowances that are debited. Discounts are also treated as contra revenue accounts. The document explains the key steps in the accounting cycle for a merchandising business.
This document provides an overview of corporation accounting, including:
1) It discusses the process of forming a corporation through incorporation and securing equity financing through the issuance of stock. Some key advantages and disadvantages of the corporate form are outlined.
2) It covers different financing options like debt versus equity, and how stocks work on private and public corporations. The roles of common stock and preferred stock are defined.
3) Key terms related to stock like authorized shares, issued shares, outstanding shares, and treasury stock are explained.
The document provides information about downloading the solutions manual for Accounting Principles Weygandt 11th Edition, including instructions for accessing a sample chapter. It outlines the chapter contents, including learning objectives, assignments, and problems. Tables provide details on the assignment classification, characteristic, and Bloom's taxonomy correlation for the chapter material. The solutions manual appears to provide answers to accounting questions and problems to help students learn the recording process concepts covered in the textbook.
Bab 5 - Balance Sheet and Statement of Cash Flowsmsahuleka
The document discusses the balance sheet and statement of cash flows. It provides learning objectives about understanding the uses and limitations of the balance sheet, identifying major classifications of the balance sheet, and preparing and understanding the statement of cash flows. Key topics covered include the purpose, content, format, and usefulness of the balance sheet and statement of cash flows.
Accounting for Partnership Formation.pdfLENY BARROGA
This document discusses accounting for partnership formation. It covers the capital structure of a partnership, including each partner having individual capital, drawing, receivable, and payable accounts. It provides an example of three partners - Bon Hok, Dyon Ok, and Meow Meng - forming a partnership by contributing cash and assets. The contributions and ownership percentages are listed. Journal entries are prepared for various partnership transactions, including partner contributions, withdrawals, purchases/payments, borrowings, and profit distributions. Finally, it briefly outlines three cases for partnership formation: two or more individuals forming a partnership, a sole proprietorship partnering with an individual, and two sole proprietorships forming a partnership.
This document provides an overview of key learning objectives and concepts to be covered in a chapter on income statements and related information. The chapter will cover understanding the uses and limitations of income statements, their content and format, how to prepare them, and how to report various items. It will also cover earnings per share information, intraperiod tax allocation, accounting changes and errors, retained earnings statements, and other comprehensive income. The document outlines these learning objectives and concepts through a series of slides, providing definitions, examples, and illustrations.
Bab 8 - Valuation of Inventories, a Cost-Basis Approachmsahuleka
This document discusses key concepts related to inventory valuation using a cost basis approach. It identifies major classifications of inventory, distinguishes between perpetual and periodic inventory systems, and describes how different cost flow assumptions like FIFO, LIFO, and average cost affect the valuation of inventory and calculation of cost of goods sold. The learning objectives cover inventory classification, the costs included in inventory valuation, LIFO reserves and liquidations, advantages and disadvantages of different methods, and why companies select certain valuation methods.
Lecture 18 revenue cycle - accounting information systesm james a. hall boo...Habib Ullah Qamar
Chapter 4 Accounting information system, the revenue cycle, overview, three key processes, physical system, Sales order processing, sales return processing, cash receipts and controls over revenue cycle
This chapter discusses accounting for cash and receivables. It defines cash as the most liquid asset and identifies items that are considered cash such as currency and bank deposits. Receivables are defined as claims against customers and others for money, goods, or services, and the main types are accounts receivable and notes receivable. The chapter explains the accounting issues around recognition, valuation, and disposition of accounts and notes receivable. It also describes how to report and analyze receivables in financial statements.
Ch03-financial reporting and accounting standardsVivi Tazkia
The document provides an overview of the key concepts and steps covered in Chapter 3 of Intermediate Accounting (IFRS 2nd Edition) by Kieso, Weygandt, and Warfield. It outlines 8 learning objectives for the chapter, which include understanding basic accounting terminology, the double-entry system, the accounting cycle, journalizing and posting transactions, adjusting entries, and preparing financial statements. The chapter also discusses the accounting equation, T-accounts, the different types of accounts, and the accounting process from recording transactions to the adjusted trial balance.
- Athena Co. issued 10,000 shares to a supplier in exchange for equipment worth P2 million. The fair value of the shares was P199 per share on the date of agreement and P192 per share on the delivery date.
- Devin Co. granted 1,000 share options to each of 10 employees that were exercisable immediately, with a fair value of P50 per option.
- Zevrek Co. granted share options to employees that vest over 3 years, with salaries expense recognized proportionately over the vesting period based on estimated employee attrition rates.
This document discusses key aspects of the income statement and related reporting issues. It covers the format and elements of the income statement, including revenues, expenses, gains and losses. It explains how items are reported within the income statement, such as gross profit, income from operations, and net income. The document also discusses reporting requirements for unusual items, discontinued operations, earnings per share, and allocation to non-controlling interests. Learning objectives cover understanding the uses and limitations of the income statement, its content and format, and how to prepare and explain the reporting of items in the statement.
Here are the calculations for the indexes requested:
1. Simple quantity index for meat in 2008 with 2006 as base year
Qn = 700
Q0 = 600
Index = Qn/Q0 * 100 = 700/600 * 100 = 116.67
2. Simple composite price index for 2007 with 2006 as base year
ΣPn/ΣP0 * 100 = (6.6 + 46 + 7.3 + 30.4)/(7 + 44 + 7 + 30.4) * 100 = 103.57
3. Laspeyres price index for 2008 with 2007 as base year
ΣPnQ0/ΣP0Q0 * 100 = (8.4
The document discusses inventory valuation methods, including:
1) Perpetual and periodic inventory systems, with the perpetual system providing continuous inventory records and the periodic system using physical counts.
2) Cost flow assumptions like FIFO, average cost, and specific identification, which can impact ending inventory balances and cost of goods sold.
3) Effects of inventory errors, which may misstate the financial statements in a given year but offset in later years.
4) Items included in inventory costs, such as product costs directly connected to goods, and treatment of purchase discounts.
The document provides objectives and content for Chapter 4 of the textbook "Accounting Information Systems, 6th edition". It covers the revenue cycle, including key processes like sales orders, billing, cash receipts, and collections. It describes the flow of transactions, necessary documents and journals, risks and controls at each step. It also discusses how technology can automate or reengineer the revenue cycle through systems like real-time processing, EDI, point-of-sale, and the implications for internal controls.
This document provides an overview of chapter 7 from the textbook "Financial Accounting, IFRS Edition" by Weygandt Kimmel Kieso. The chapter covers fraud, internal control, and cash. It defines fraud and internal control, identifies principles of internal control activities, and explains applications of internal control principles to cash receipts and disbursements. It also describes petty cash fund operations, control features of bank accounts including bank reconciliations, and reporting of cash. The document consists of a series of slides with definitions, examples, and review questions.
The process of inventory accounting and its needs is explained in this PPT presentation. An Inventory appears in two principal financial statements. They are Income Statement and Balance Sheet. “Financial Accounting” lesson bought to you by Welingkar’s Distance Learning Division.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/SlideshareFaccounting
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Follow us on Twitter: https://twitter.com/WeLearnIndia
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This document provides an overview of the basic accounting recording process. It discusses key concepts like accounts, debits and credits, the journal and ledger, and the trial balance. The journal is used to initially record transactions and shows debits and credits. Journal entries are then posted to individual accounts in the ledger. A trial balance lists account balances and proves the equality of total debits and credits.
This document provides an overview of financial statement analysis for a company called Basket Wonders. It includes sample financial statements for Basket Wonders including a balance sheet and income statement. It then discusses various types of ratio analysis that can be used to analyze the financial statements including liquidity ratios, leverage ratios, coverage ratios, and activity/turnover ratios. It calculates these ratios for Basket Wonders and compares them to industry averages to identify areas of strength or weakness for the company. Key findings include potential issues with Basket Wonders' inventory levels and lower than average profitability.
This document discusses absorption costing and variable costing. Absorption costing includes both variable and fixed production costs in inventory and cost of goods sold, while variable costing includes only variable costs. Variable costing is more consistent with contribution margin analysis and decision making. Absorption costing is required for external financial reporting and tax purposes, but variable costing provides more useful information to management for decision making.
The document discusses various topics related to reporting and analyzing receivables:
1. It identifies the different types of receivables as accounts receivable, notes receivable, and other receivables.
2. It explains how accounts receivable are recognized in accounts through journal entries and discusses methods for valuing and accounting for bad debts, including the allowance and direct write-off methods.
3. It describes how notes receivable are recorded through journal entries, including recognizing, valuing, and disposing of notes receivable.
- Merchandise inventory refers to goods purchased by a business for resale. It is classified as an asset on the balance sheet.
- Costs included in inventory are purchase price, shipping, insurance, storage, and any other costs to get goods ready for sale. These costs are debited to the inventory account.
- When inventory is sold, cost of goods sold is debited to match the expense with revenue. Inventory is then credited to reduce the asset on the balance sheet. This moves the inventory cost from asset to expense.
A trial balance is a bookkeeping worksheet that compiles the debit and credit balances of all general ledger accounts. It is prepared periodically, usually at the end of a reporting period, to check that the mathematical totals of debits and credits in the general ledger are equal. It acts as the first step in preparing financial statements and ensures account balances are accurately extracted from ledgers. While a trial balance verifies arithmetic accuracy, some errors may remain undetected if offsetting incorrect debits and credits are made.
The income statement shows a company's revenues and expenses over a period of time, with the goal of showing whether the company made a profit or loss. It displays revenues, costs of goods sold that generated the revenues, and all other expenses. The difference between total revenues and total expenses is the net income or loss for the period. Key sections include revenues, costs of goods sold, gross profit, operating expenses, operating income, non-operating items, and net income. The income statement is an important financial statement that helps managers and investors understand a company's financial performance over time.
Chapter 2 - The Business, Tax, and Financial Environmentsumarhnasution
This document provides an overview of business environments, tax environments, and financial environments. It discusses different forms of business organizations including sole proprietorships, partnerships, corporations, and limited liability companies. It also covers topics such as corporate income taxes, depreciation, losses and gains, capital gains/losses, personal income taxes, financial markets, risk-return profiles, and factors that influence expected security returns.
This document provides an overview of accounting information systems. It defines key terms like transactions, information systems, accounting information systems, and subsystems. It describes how information flows within a business both horizontally and vertically. It also explains how data is collected and transformed into useful information for decision making through functions like data collection, processing, management and generation. The document outlines characteristics of useful information and objectives of information systems in businesses. It discusses topics like organizational structure, functional areas, and the roles of accountants as users, designers and auditors of information systems.
Here are the steps to solve this EPQ problem:
1) Demand per year = 48,000 wheels
2) Production rate per day = 800 wheels
3) Setup cost = $45
4) Carrying cost per wheel = $1
5) Number of working days per year = 240
6) Using the EPQ formula:
EPQ = √(2 * Demand * Setup cost / Carrying cost per unit)
= √(2 * 48,000 * $45 / $1)
= √432,000 = 208 wheels
7) Cycle time = EPQ / Production rate per day
= 208 / 800 = 0.26 days = 6.
This document discusses how to prepare three basic financial statements: the income statement, statement of retained earnings, and balance sheet. It provides examples of the components and format of each statement. The income statement reports revenues, expenses and net income. The statement of retained earnings shows the changes in retained earnings from net income and dividends. The balance sheet lists assets, liabilities, and equity on a specific date. Preparing these statements helps users make better financial decisions.
This chapter discusses accounting for cash and receivables. It defines cash as the most liquid asset and identifies items that are considered cash such as currency and bank deposits. Receivables are defined as claims against customers and others for money, goods, or services, and the main types are accounts receivable and notes receivable. The chapter explains the accounting issues around recognition, valuation, and disposition of accounts and notes receivable. It also describes how to report and analyze receivables in financial statements.
Ch03-financial reporting and accounting standardsVivi Tazkia
The document provides an overview of the key concepts and steps covered in Chapter 3 of Intermediate Accounting (IFRS 2nd Edition) by Kieso, Weygandt, and Warfield. It outlines 8 learning objectives for the chapter, which include understanding basic accounting terminology, the double-entry system, the accounting cycle, journalizing and posting transactions, adjusting entries, and preparing financial statements. The chapter also discusses the accounting equation, T-accounts, the different types of accounts, and the accounting process from recording transactions to the adjusted trial balance.
- Athena Co. issued 10,000 shares to a supplier in exchange for equipment worth P2 million. The fair value of the shares was P199 per share on the date of agreement and P192 per share on the delivery date.
- Devin Co. granted 1,000 share options to each of 10 employees that were exercisable immediately, with a fair value of P50 per option.
- Zevrek Co. granted share options to employees that vest over 3 years, with salaries expense recognized proportionately over the vesting period based on estimated employee attrition rates.
This document discusses key aspects of the income statement and related reporting issues. It covers the format and elements of the income statement, including revenues, expenses, gains and losses. It explains how items are reported within the income statement, such as gross profit, income from operations, and net income. The document also discusses reporting requirements for unusual items, discontinued operations, earnings per share, and allocation to non-controlling interests. Learning objectives cover understanding the uses and limitations of the income statement, its content and format, and how to prepare and explain the reporting of items in the statement.
Here are the calculations for the indexes requested:
1. Simple quantity index for meat in 2008 with 2006 as base year
Qn = 700
Q0 = 600
Index = Qn/Q0 * 100 = 700/600 * 100 = 116.67
2. Simple composite price index for 2007 with 2006 as base year
ΣPn/ΣP0 * 100 = (6.6 + 46 + 7.3 + 30.4)/(7 + 44 + 7 + 30.4) * 100 = 103.57
3. Laspeyres price index for 2008 with 2007 as base year
ΣPnQ0/ΣP0Q0 * 100 = (8.4
The document discusses inventory valuation methods, including:
1) Perpetual and periodic inventory systems, with the perpetual system providing continuous inventory records and the periodic system using physical counts.
2) Cost flow assumptions like FIFO, average cost, and specific identification, which can impact ending inventory balances and cost of goods sold.
3) Effects of inventory errors, which may misstate the financial statements in a given year but offset in later years.
4) Items included in inventory costs, such as product costs directly connected to goods, and treatment of purchase discounts.
The document provides objectives and content for Chapter 4 of the textbook "Accounting Information Systems, 6th edition". It covers the revenue cycle, including key processes like sales orders, billing, cash receipts, and collections. It describes the flow of transactions, necessary documents and journals, risks and controls at each step. It also discusses how technology can automate or reengineer the revenue cycle through systems like real-time processing, EDI, point-of-sale, and the implications for internal controls.
This document provides an overview of chapter 7 from the textbook "Financial Accounting, IFRS Edition" by Weygandt Kimmel Kieso. The chapter covers fraud, internal control, and cash. It defines fraud and internal control, identifies principles of internal control activities, and explains applications of internal control principles to cash receipts and disbursements. It also describes petty cash fund operations, control features of bank accounts including bank reconciliations, and reporting of cash. The document consists of a series of slides with definitions, examples, and review questions.
The process of inventory accounting and its needs is explained in this PPT presentation. An Inventory appears in two principal financial statements. They are Income Statement and Balance Sheet. “Financial Accounting” lesson bought to you by Welingkar’s Distance Learning Division.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/SlideshareFaccounting
Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLP
This document provides an overview of the basic accounting recording process. It discusses key concepts like accounts, debits and credits, the journal and ledger, and the trial balance. The journal is used to initially record transactions and shows debits and credits. Journal entries are then posted to individual accounts in the ledger. A trial balance lists account balances and proves the equality of total debits and credits.
This document provides an overview of financial statement analysis for a company called Basket Wonders. It includes sample financial statements for Basket Wonders including a balance sheet and income statement. It then discusses various types of ratio analysis that can be used to analyze the financial statements including liquidity ratios, leverage ratios, coverage ratios, and activity/turnover ratios. It calculates these ratios for Basket Wonders and compares them to industry averages to identify areas of strength or weakness for the company. Key findings include potential issues with Basket Wonders' inventory levels and lower than average profitability.
This document discusses absorption costing and variable costing. Absorption costing includes both variable and fixed production costs in inventory and cost of goods sold, while variable costing includes only variable costs. Variable costing is more consistent with contribution margin analysis and decision making. Absorption costing is required for external financial reporting and tax purposes, but variable costing provides more useful information to management for decision making.
The document discusses various topics related to reporting and analyzing receivables:
1. It identifies the different types of receivables as accounts receivable, notes receivable, and other receivables.
2. It explains how accounts receivable are recognized in accounts through journal entries and discusses methods for valuing and accounting for bad debts, including the allowance and direct write-off methods.
3. It describes how notes receivable are recorded through journal entries, including recognizing, valuing, and disposing of notes receivable.
- Merchandise inventory refers to goods purchased by a business for resale. It is classified as an asset on the balance sheet.
- Costs included in inventory are purchase price, shipping, insurance, storage, and any other costs to get goods ready for sale. These costs are debited to the inventory account.
- When inventory is sold, cost of goods sold is debited to match the expense with revenue. Inventory is then credited to reduce the asset on the balance sheet. This moves the inventory cost from asset to expense.
A trial balance is a bookkeeping worksheet that compiles the debit and credit balances of all general ledger accounts. It is prepared periodically, usually at the end of a reporting period, to check that the mathematical totals of debits and credits in the general ledger are equal. It acts as the first step in preparing financial statements and ensures account balances are accurately extracted from ledgers. While a trial balance verifies arithmetic accuracy, some errors may remain undetected if offsetting incorrect debits and credits are made.
The income statement shows a company's revenues and expenses over a period of time, with the goal of showing whether the company made a profit or loss. It displays revenues, costs of goods sold that generated the revenues, and all other expenses. The difference between total revenues and total expenses is the net income or loss for the period. Key sections include revenues, costs of goods sold, gross profit, operating expenses, operating income, non-operating items, and net income. The income statement is an important financial statement that helps managers and investors understand a company's financial performance over time.
Chapter 2 - The Business, Tax, and Financial Environmentsumarhnasution
This document provides an overview of business environments, tax environments, and financial environments. It discusses different forms of business organizations including sole proprietorships, partnerships, corporations, and limited liability companies. It also covers topics such as corporate income taxes, depreciation, losses and gains, capital gains/losses, personal income taxes, financial markets, risk-return profiles, and factors that influence expected security returns.
This document provides an overview of accounting information systems. It defines key terms like transactions, information systems, accounting information systems, and subsystems. It describes how information flows within a business both horizontally and vertically. It also explains how data is collected and transformed into useful information for decision making through functions like data collection, processing, management and generation. The document outlines characteristics of useful information and objectives of information systems in businesses. It discusses topics like organizational structure, functional areas, and the roles of accountants as users, designers and auditors of information systems.
Here are the steps to solve this EPQ problem:
1) Demand per year = 48,000 wheels
2) Production rate per day = 800 wheels
3) Setup cost = $45
4) Carrying cost per wheel = $1
5) Number of working days per year = 240
6) Using the EPQ formula:
EPQ = √(2 * Demand * Setup cost / Carrying cost per unit)
= √(2 * 48,000 * $45 / $1)
= √432,000 = 208 wheels
7) Cycle time = EPQ / Production rate per day
= 208 / 800 = 0.26 days = 6.
This document discusses how to prepare three basic financial statements: the income statement, statement of retained earnings, and balance sheet. It provides examples of the components and format of each statement. The income statement reports revenues, expenses and net income. The statement of retained earnings shows the changes in retained earnings from net income and dividends. The balance sheet lists assets, liabilities, and equity on a specific date. Preparing these statements helps users make better financial decisions.
The document discusses key financial statements and concepts:
- The income statement measures performance over a period by comparing revenues to expenses, yielding net income. It uses accrual accounting to match revenues with the expenses to generate those revenues.
- The balance sheet shows a company's financial position at a point in time by listing its assets, liabilities, and equity. The cash flow statement explains changes in cash from operating, investing, and financing activities.
- Key income statement components include revenues, expenses, and net income. Revenue is recognized following certain criteria and on an accrual basis, as is the recording of expenses according to the matching principle.
This document summarizes accounting concepts and procedures for merchandising businesses. It discusses the periodic and perpetual inventory systems, transactions involved in purchases and sales, and how the cost of goods sold is determined. It also outlines the multiple-step and single-step income statement formats for merchandising companies.
The document is a presentation on an income statement for a company. It includes definitions of key elements of an income statement like revenues, expenses, gains and losses. It describes the two main types of income statements - single-step and multiple-step. It provides an example of a multiple-step income statement for Terry Manning Fashion Center for the year ended December 31, 2010, including calculations of net income and earnings per share.
Common Size Income Statement and Balance Sheet | AccountingTransweb Global Inc
“An Income Statement or profit and loss account (also referred to as a profit and loss statement (P&L), statement of profit or loss, revenue statement, statement of financial performance, earnings statement, operating statement, or statement of operations) is one of the financial statements of a company and shows the company’s revenues and expenses during a particular period.” (Helfert, Erich A. 2001). Copy the link given below and paste it in new browser window to get more information on Common Size Income Statement and Balance Statement:- http://www.transtutors.com/homework-help/accounting/common-size-income-statement-and-balance-sheet.aspx
This document discusses inventory and the perpetual inventory system. It defines inventory as goods that a trading firm buys and sells. The perpetual inventory system continuously updates the inventory account when stock moves in or out, allowing for greater control over stock levels. Physical stocktakes are still needed periodically to verify inventory quantities and values. Stock cards are used to track individual inventory items and their movements. Stock losses and gains may occur if physical counts do not match the stock cards, requiring adjusting entries.
This document discusses key concepts related to inventory accounting, including determining inventory quantities through physical counts and assessing ownership, accounting for inventory using different cost flow methods like FIFO and LIFO, and understanding the financial statement and tax effects of different cost flow assumptions. The objectives are to explain steps to determine inventory quantities, apply cost flow methods, and analyze the impacts of assumptions on financial reporting and taxes.
An Income Statement of a company is a financial statement that shows the company’s revenues and expenses during a specific accounting period. This statement reports the financial performance of the company. Copy the link given below and paste it in new browser window to get more information on Income Statement:- www.transtutors.com/homework-help/finance/income-statement.aspx
Bab 4 Income Statement and Related Informationmsahuleka
The document discusses key elements and objectives related to preparing and understanding income statements, including:
- The uses and limitations of income statements in evaluating past performance and predicting future cash flows
- Components of single-step and multiple-step income statements and how they differ
- Reporting of irregular items like discontinued operations, extraordinary items, and changes in accounting principles
- Intraperiod tax allocation and where earnings per share information is reported
An efficiently written income statement is important for small businesses and their managers or investors to assess revenues, expenses, and profits or losses over a period of time. It shows the inflows and outflows of funds for a business. There are two ways to write an income statement - single-step or multi-step. The multi-step format provides a more detailed and accurate breakdown of revenues and expenses. An income statement can reveal if insufficient funds or poor money management caused a business to fail. It allows businesses to see where they are overspending or need to increase spending.
The document compares periodic and perpetual inventory systems. A periodic system only counts inventory at the end of a period, while a perpetual system continuously updates inventory records. The periodic system requires a physical count and has less control, while the perpetual system has ongoing costs but provides continuous, accurate inventory and cost of goods sold information needed for management decisions. Overall, the perpetual system is preferred as it avoids inventory counts and provides more timely data.
This document contains information about an upcoming presentation on financial statements. It lists the names and roll numbers of 7 presenters and the topics they will cover, including an overview of financial statements, the income statement, its purpose, components and limitations. It provides examples of the components of an income statement, such as revenue, expenses, net income. It concludes by listing an actual income statement from Wipro's 2014-15 annual report.
First In, First Out (FIFO); Last In, Last Out (LIFO)UNowAcademics
This document discusses two methods for valuing inventory - First In, First Out (FIFO) and Last In, First Out (LIFO). FIFO matches the costs of the oldest inventory units with the sales revenue, while LIFO matches the costs of the newest inventory units with sales. The document provides examples to illustrate how inventory values would be reported under each method when a company produces and sells different quantities of inventory over time.
The document discusses different types of income statements, including single-step and multiple-step income statements. A single-step income statement presents revenues and expenses in broad categories, while a multiple-step income statement distinguishes operating activities from non-operating activities. The document also defines irregular items reported on an income statement such as discontinued operations, extraordinary items, and changes in accounting principles.
The document discusses income statements and balance sheets. It defines an income statement as presenting a company's revenues, expenses and profits over a period of time, focusing on revenues and costs associated with revenues. It defines a balance sheet as summarizing a company's assets, liabilities, and shareholders' equity at a point in time, showing the relationship that assets equal liabilities plus owners' equity. It provides examples of components and formats for both financial statements.
This document discusses accounting for merchandising operations under a perpetual inventory system. It covers recording purchases and sales, including returns and discounts. It explains adjusting entries needed to update inventory balances and the multiple-step income statement format that distinguishes gross profit and operating expenses. The accounting cycle for a merchandising company is similar to a service company except for an additional inventory adjustment entry.
This document provides an overview and learning objectives for a chapter on accounting for merchandising operations. It discusses key differences between service and merchandising companies, including that merchandising companies buy and sell goods while service companies do not include cost of goods sold in their financial statements. It also covers recording purchases and sales under a perpetual inventory system, including entries for purchases, freight costs, returns, discounts, and sales.
1) The document discusses accounting for merchandising operations under a perpetual inventory system. It describes how purchases, sales, returns and allowances are recorded.
2) Purchases are recorded by debiting inventory and crediting accounts payable. Sales are recorded by crediting sales revenue and debiting cost of goods sold and inventory.
3) Returns and allowances are contra accounts that are credited to offset original debit entries for purchases or sales. This summary highlights the key accounting entries for a merchandising business.
1. The document describes accounting concepts and procedures for merchandising companies, including recording purchases and sales under a perpetual inventory system.
2. Key concepts covered include recording purchases on account, purchase returns and allowances, purchase discounts, recording sales on account, sales returns and allowances, and sales discounts.
3. Examples are provided to illustrate journal entries for typical purchase and sales transactions such as recording purchases and payment with a discount taken, and recording sales and subsequent returns.
The multiple-step income statement for a merchandiser shows each of the following features except:
b. cost of goods sold.
The multiple-step income statement shows:
- Net sales
- Gross profit
- Operating expenses
- Nonoperating activities
- Net income
It does not specifically show cost of goods sold, as that amount is used to calculate gross profit.
1. The passage describes fraud committed by a store cashier named Holly Harmon over a short period of time using three methods: switching UPC labels to charge more for items, voiding sales but leaving items in carts, and scanning empty containers but not items inside.
2. Holly was later identified through a review of past surveillance tapes after she did not show up for a shift. This allowed the store to observe her thefts on video.
3. The passage notes that better human resource and physical controls could have prevented the fraud, such as background checks, software to flag voided transactions, and random checks of video and register records.
This document provides an overview of accounting for merchandising operations. It defines merchandising companies as those that buy and sell goods, with sales revenue as the primary source of income. It discusses the differences between merchandising and service companies, including that merchandising companies use an inventory account and calculate cost of goods sold. The document also covers perpetual and periodic inventory systems, recording purchases and sales, and purchase/sales returns, discounts, and allowances.
The document provides an overview of accounting for merchandising operations. It discusses:
1) The differences between service companies and merchandising companies. Merchandising companies purchase inventory to sell directly or to retailers/wholesalers.
2) The operating cycle and flow of costs for merchandising companies, which involves perpetual and periodic inventory systems for recording purchases and sales.
3) Key steps in the accounting cycle for merchandising companies, including adjusting and closing entries to determine net income.
This chapter discusses accounting for merchandising operations. It covers topics such as merchandising operations and inventory systems, recording purchases and sales under a perpetual inventory system, adjusting entries for a merchandising company, and preparing income statements. The key points are:
- Merchandising companies sell goods and use a perpetual or periodic inventory system to track purchases and sales.
- Under a perpetual system, the cost of goods sold is recorded with each sale and purchase transactions are recorded when they occur.
- Adjusting entries include adjusting inventory to the physical count at period end.
- Income statements for merchandising companies include a gross profit figure and report revenues from sales.
This document provides an overview of accounting for merchandising transactions using both perpetual and periodic inventory systems. It compares service and merchandising businesses, discusses types of inventory and sales transactions including purchases, returns, discounts and allowances. Journal entries are presented for purchases, sales, returns and adjustments under both perpetual and periodic inventory systems.
The document discusses inventory costing methods for merchandising companies. It covers topics such as taking a physical inventory, determining inventory quantities, cost flow assumptions under FIFO and average costing, and the effects of inventory errors on financial statements. Proper internal controls over physical inventory counts include segregating inventory custody and counting duties and verifying counts through independent verification.
Valuation of Inventories: A Cost-Basis Approachreskino1
Describe inventory classifications and different inventory systems.
Identify the goods and costs included in inventory.
Compare the cost flow assumptions used to account for inventories.
Determine the effects of inventory errors on the financial statements.
A merchandising business buys and sells goods to make a profit. The goods purchased for resale are called merchandise. There are two main systems for tracking inventory - perpetual and periodic. The perpetual system tracks inventory in real time with each purchase or sale, while the periodic system only calculates cost of goods sold at the end of each period based on a physical inventory count. Calculating cost of goods sold is important for measuring income for merchandising businesses.
This document discusses accounting for inventories. It covers classifying inventory into raw materials, work in process and finished goods for manufacturing companies. It also discusses valuing inventory under the periodic and perpetual inventory systems. The document explains the basic issues in inventory valuation including determining ownership, costs included, and cost flow assumptions like specific identification, FIFO and average cost. It provides examples of applying inventory cost flow methods.
The document discusses accounting transactions for purchases and sales of stock. It explains that purchases increase the stock asset and may increase liabilities, while sales decrease stock and increase a receivable asset. Purchases on credit differ from those paid in cash in their impact on liabilities. Similarly, sales on credit differ from cash sales in their impact on receivables. The document also covers returns inwards, which increase stock when goods are returned by customers, and returns outwards, which decrease stock and liabilities when goods are returned to suppliers.
1) The document discusses accounting for merchandising businesses. It explains that for merchandising businesses, revenue comes from sales and expenses are divided into cost of goods sold and operating expenses.
2) It describes the periodic and perpetual inventory systems and how they are used to track inventory levels and calculate cost of goods sold. The periodic system involves periodic physical counts while the perpetual system continuously tracks inventory.
3) The document provides examples of journal entries for purchases, sales, returns, and allowances for merchandising businesses. It explains how to record transactions like purchases, sales, returns, discounts and freight costs under both accounting systems.
This document summarizes key concepts related to merchandising activities for companies that buy and sell goods. It discusses how merchandisers derive revenue from sales rather than services. It also outlines the basic accounting entries for purchases, sales, returns and allowances. Inventory systems and calculations for cost of goods sold are summarized. Key financial statements for merchandising companies are identified.
This document provides an overview of chapter 6 on inventories from the textbook "Financial Accounting, IFRS Edition". It outlines 6 study objectives related to determining inventory quantities, accounting for inventories using different cost flow methods, the financial effects of cost flow assumptions, the lower-of-cost-or-net realizable value basis, effects of inventory errors, and analyzing inventories using turnover ratios. The document contains slides with explanations, examples, and review questions to explain key inventory accounting concepts.
This document provides an overview of inventory valuation methods. It begins with learning objectives related to identifying inventory classifications, distinguishing perpetual and periodic inventory systems, and understanding the treatment of inventory costs. The document then discusses the major classifications of inventory, physical goods included in inventory, and costs that make up inventory value. It also explains specific identification, average costing, FIFO, and LIFO inventory cost flow assumptions. The document concludes by comparing inventory valuation methods and explaining why companies select different methods.
The document discusses cost recovery methods used under tax law to recover the costs of assets over time. It explains concepts of basis, adjusted basis, depreciation, amortization, and depletion. It provides details on determining cost recovery periods and methods for tangible and intangible assets. Examples are given for calculating depreciation of real property and personal property using MACRS tables.
This document summarizes key concepts from Chapter 8 of a business income and deductions textbook. It discusses:
1) Requirements for deducting business expenses and common deductions.
2) Limitations on deductions including ordinary and necessary expenses.
3) Special deductions specifically allowed like startup costs and bad debts.
4) Accounting periods and methods for calculating business income including accrual and cash methods.
5) Timing of income and expense recognition under accrual accounting.
This document provides an overview of tax compliance and the IRS audit process. It discusses taxpayer filing requirements, tax return due dates, statutes of limitations, how returns are selected for audit, the types of audits, and tax law sources such as statutory, judicial, and administrative authorities. Primary authorities include the Internal Revenue Code, court rulings, and Treasury regulations. Tax professionals must follow ethics codes and can face penalties for noncompliance.
This chapter discusses the importance of understanding taxes and how they influence business, investment, personal, and political decisions. It defines what constitutes a tax and describes different tax structures and rates. Key points include:
- Taxes are payments required by the government unrelated to specific benefits received.
- Tax rates can be marginal, average, or effective and are usually expressed as a percentage of the tax base.
- Tax structures can be proportional, progressive, or regressive depending on how rates change with the tax base.
- Major taxes include federal income, employment, excise, and estate/gift taxes as well as state/local sales, property, income, and excise taxes.
This document summarizes key concepts related to accounting for long-lived assets. It explains that plant assets should be recorded at cost and depreciated over their useful lives using methods like straight-line or declining-balance. Depreciation is allocated to expense the asset's cost over its useful life. When assets are disposed, any difference between book value and proceeds is recorded as a gain or loss. Ratios can evaluate asset usage. Intangible assets with limited lives are amortized, while those with indefinite lives are not.
The document discusses accounting for current and long-term liabilities. It defines a current liability and identifies major types like accounts payable, unearned revenue, and payroll taxes payable. It describes accounting for notes payable, bonds, and bond issuance at face value, discount or premium. It also addresses accounting entries for bond interest expense and redemption, and financial statement presentation of liabilities.
1. The document defines fraud and internal control, identifies principles of internal control activities, and explains applications of internal control principles to cash receipts and disbursements. It also discusses preparing bank reconciliations, reporting cash, cash management principles, cash budgets, and petty cash funds.
2. Key internal control activities include segregation of duties, documentation procedures, independent verification, and human resource controls. Controls over cash receipts include using prenumbered documents and restricting cash handling. Controls over cash disbursements include using prenumbered checks and a voucher system.
3. Bank reconciliations compare the adjusted cash balance per books to the adjusted cash balance per bank statement. Cash is reported on the balance sheet and
This document discusses various topics related to receivables accounting including types of receivables, recognizing and valuing accounts receivable, methods for accounting for bad debts, notes receivable, statement presentation of receivables, managing receivables, and analyzing receivables. It provides examples and explanations of key receivables accounting concepts and calculations.
The document discusses key concepts in the accounting information system including:
1) The basic steps in the recording process such as analyzing transactions, journalizing, posting to ledger accounts, and preparing a trial balance.
2) The use of debits and credits to record transactions and their effect on different types of accounts.
3) The purpose and use of accounts, journals, ledgers, and the trial balance in the recording process.
This document discusses key accounting concepts related to accrual accounting including the revenue recognition principle, matching principle, and differences between cash basis and accrual basis accounting. It explains why adjusting entries are needed to follow these concepts and identifies major types of adjusting entries such as those for deferrals and accruals. Specific topics covered include preparing adjusting entries for prepaid expenses, unearned revenues, accrued revenues, and accrued expenses.
The document discusses key concepts in financial statement analysis including:
1) The components of a classified balance sheet such as current assets, long-term investments, property and equipment.
2) Ratios to analyze profitability, liquidity, and solvency using the income statement, balance sheet, and statement of cash flows.
3) Financial reporting concepts like GAAP, assumptions, principles, and constraints that guide financial statement preparation.
The document describes the key components of financial statements and annual reports. It explains that financial statements include the income statement, balance sheet, statement of cash flows, and retained earnings statement. It also discusses the three types of business activities - financing, investing, and operating. The annual report contains financial statements, management discussion and analysis, notes to the financial statements, and the auditor's report.
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...Neil Horowitz
On episode 272 of the Digital and Social Media Sports Podcast, Neil chatted with Brian Fitzsimmons, Director of Licensing and Business Development for Barstool Sports.
What follows is a collection of snippets from the podcast. To hear the full interview and more, check out the podcast on all podcast platforms and at www.dsmsports.net
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This PowerPoint compilation offers a comprehensive overview of 20 leading innovation management frameworks and methodologies, selected for their broad applicability across various industries and organizational contexts. These frameworks are valuable resources for a wide range of users, including business professionals, educators, and consultants.
Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
11. Strategyn’s Jobs-To-Be-Done (JTBD) Framework with Job Map
12. Design Sprint Framework
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14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
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Starting a business is like embarking on an unpredictable adventure. It’s a journey filled with highs and lows, victories and defeats. But what if I told you that those setbacks and failures could be the very stepping stones that lead you to fortune? Let’s explore how resilience, adaptability, and strategic thinking can transform adversity into opportunity.
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Top 10 Free Accounting and Bookkeeping Apps for Small BusinessesYourLegal Accounting
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5. Merchandising Operations SO 1 Identify the differences between service and merchandising companies. Merchandising Companies Buy and Sell Goods Wholesaler Retailer Consumer The primary source of revenues is referred to as sales revenue or sales .
6. Merchandising Operations SO 1 Identify the differences between service and merchandising companies. Income Measurement Cost of goods sold is the total cost of merchandise sold during the period. Not used in a Service business. Net Income (Loss) Less Less Equals Equals Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Illustration 5-1 Income measurement process for a merchandising company
7. Merchandising Operations The operating cycle of a merchandising company ordinarily is longer than that of a service company . Illustration 5-2 SO 1 Identify the differences between service and merchandising companies. Operating Cycles
8. Merchandising Operations Flow of Costs Companies use either a perpetual inventory system or a periodic inventory system to account for inventory. SO 1 Identify the differences between service and merchandising companies. Illustration 5-3
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14. Recording Purchases of Merchandise Illustration: Sauk Stereo (the buyer) uses as a purchase invoice the sales invoice prepared by PW Audio Supply, Inc. (the seller). Prepare the journal entry for Sauk Stereo for the invoice from PW Audio Supply. Merchandise inventory 3,800 May 4 Accounts payable 3,800 SO 2 Explain the recording of purchases under a perpetual inventory system. Illustration 5-5
15. Recording Purchases of Merchandise Illustration 5-6 Seller places goods Free On Board the carrier, and buyer pays freight costs. Seller places goods Free On Board to the buyer’s place of business, and seller pays freight costs. Freight Costs – Terms of Sale Freight costs incurred by the seller are an operating expense.
16. Recording Purchases of Merchandise Illustration: Assume upon delivery of the goods on May 6, Sauk Stereo pays Haul-It Freight Company $150 for freight charges, the entry on Sauk Stereo’s books is: Merchandise inventory 150 May 6 Cash 150 SO 2 Explain the recording of purchases under a perpetual inventory system. Assume the freight terms on the invoice in Illustration 5-5 had required PW Audio Supply to pay the freight charges, the entry by PW Audio Supply would have been: Freight-out 150 May 4 Cash 150
17. Recording Purchases of Merchandise Purchaser may be dissatisfied because g oods are damaged or defective, of inferior quality, or do not meet specifications. Purchase Returns and Allowances Return goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash. May choose to keep the merchandise if the seller will grant an allowance (deduction) from the purchase price. Purchase Return Purchase Allowance SO 2 Explain the recording of purchases under a perpetual inventory system.
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19. Recording Purchases of Merchandise SO 2 Explain the recording of purchases under a perpetual inventory system. Illustration: Assume that on May 8 Sauk Stereo returned to PW Audio Supply goods costing $300. Accounts payable 300 May 8 Merchandise inventory 300
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21. Recording Purchases of Merchandise Purchase Discounts - Terms 2% discount if paid within 10 days, otherwise net amount due within 30 days. 1% discount if paid within first 10 days of next month. 2/10, n/30 1/10 EOM Net amount due within the first 10 days of the next month. n/10 EOM SO 2 Explain the recording of purchases under a perpetual inventory system.
22. Recording Purchases of Merchandise Accounts payable 3,500 May 14 Cash 3,430 Merchandise Inventory 70 (Discount = $3,500 x 2% = $70 ) SO 2 Explain the recording of purchases under a perpetual inventory system. Illustration: Assume Sauk Stereo pays the balance due of $3,500 (gross invoice price of $3,800 less purchase returns and allowances of $300) on May 14, the last day of the discount period. Prepare the journal entry Sauk makes to record its May 14 payment.
23. Recording Purchases of Merchandise Accounts payable 3,500 June 3 Cash 3,500 SO 2 Explain the recording of purchases under a perpetual inventory system. Illustration: If Sauk Stereo failed to take the discount, and instead made full payment of $3,500 on June 3, the journal entry would be:
24. Recording Purchases of Merchandise Should discounts be taken when offered? Purchase Discounts Example: 2% for 20 days = Annual rate of 36.5% (365/20 = 18.25 twenty-day periods x 2% = 36.5%) Passing up the discount offered equates to paying an interest rate of 2% on the use of $3,500 for 20 days. SO 2 Explain the recording of purchases under a perpetual inventory system.
25. Recording Purchases of Merchandise $3,500 8 th - Return $300 Balance 4 th - Purchase $3,280 70 14 th - Discount Summary of Purchasing Transactions 150 6 th – Freight-in Illustration SO 2 Explain the recording of purchases under a perpetual inventory system.
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27. Recording Sales of Merchandise Two Journal Entries to Record a Sale Cash or Accounts receivable XXX Sales XXX SO 3 Explain the recording of sales revenues under a perpetual inventory system. #1 Cost of goods sold XXX Merchandise inventory XXX #2 Selling Price Cost
28. Recording Sales of Merchandise SO 3 Explain the recording of sales revenues under a perpetual inventory system. Accounts receivable 3,800 May 4 Sales 3,800 Illustration: Assume PW Audio Supply records its May 4 sale of $3,800 to Sauk Stereo on account (Illustration 5-5) as follows. Assume the merchandise cost PW Audio Supply $2,400. Cost of goods sold 2,400 4 Merchandise inventory 2,400
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30. Recording Sales of Merchandise Illustration: Prepare the entry PW Audio Supply would make to record the credit for returned goods that had a $300 selling price (assume a $140 cost). Assume the goods were not defective. SO 3 Explain the recording of sales revenues under a perpetual inventory system. Sales returns and allowances 300 May 8 Accounts receivable 300 Merchandise inventory 140 8 Cost of goods sold 140
31. Recording Sales of Merchandise Illustration: Assume the returned goods were defective and had a scrap value of $50, PW Audio would make the following entries: SO 3 Explain the recording of sales revenues under a perpetual inventory system. Sales returns and allowances 300 May 8 Accounts receivable 300 Merchandise inventory 50 8 Cost of goods sold 50
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35. Recording Sales of Merchandise SO 3 Explain the recording of sales revenues under a perpetual inventory system. Cash 3,430 May 14 Accounts receivable 3,500 Sales discounts 70 * [($3,800 – $300) X 2%] * Illustration: Assume Sauk Stereo pays the balance due of $3,500 (gross invoice price of $3,800 less purchase returns and allowances of $300) on May 14, the last day of the discount period. Prepare the journal entry PW Audio Supply makes to record the receipt on May 14.
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37. Income Statement Presentation Illustration 5-7 Single-Step SO 4 Distinguish between a single-step and a multiple-step income statement.
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39. Income Statement Presentation Key Line Items Multiple-Step SO 4 Distinguish between a single-step and a multiple-step income statement. Illustration 5-8
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41. Income Statement Presentation Sales Revenues SO 4 Distinguish between a single-step and a multiple-step income statement. Illustration 5-9
42. Income Statement Presentation SO 4 Distinguish between a single-step and a multiple-step income statement. Illustration 5-11 Comparisons with past amounts and rates and with those in the industry indicate the effectiveness of a company’s purchasing and pricing policies. Gross Profit
44. Income Statement Presentation SO 4 Distinguish between a single-step and a multiple-step income statement. Illustration 5-10 Nonoperating Activities Various revenues and expenses and gains and losses that are unrelated to the company’s main line of operations.
48. Income Statement Presentation SO 5 Determine cost of goods sold under a periodic system. Determining Cost of Goods Sold Under a Periodic System Illustration 5-13 Cost of goods sold for a merchandiser using a periodic inventory system
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50. Evaluating Profitability SO 6 Explain the factors affecting profitability. Gross Profit Rate Illustration 5-15 Why does Wal-Mart have a lower gross profit rate than Target and the industry average?
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52. Evaluating Profitability SO 6 Explain the factors affecting profitability. Illustration 5-17 Profit Margin Ratio How does Wal-Mart compare to its competitors? Keep in mind that an increasing percentage of Wal-Mart’s sales is from low-margin groceries.
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56. Periodic Inventory System SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system. Illustration: On the basis of the sales invoice (Illustration 5-5) and receipt of the merchandise ordered from PW Audio Supply, Sauk Stereo records the $3,800 purchase as follows. Purchases 3,800 May 4 Accounts payable 3,800 Recording Purchases of Merchandise
57. Periodic Inventory System Illustration: If Sauk pays Haul-It Freight Company $150 for freight charges on its purchase from PW Audio Supply on May 6, the entry on Sauk’s books is: Freight-in (Transportation-in) 150 May 6 Cash 150 Freight Costs SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
58. Periodic Inventory System Illustration: Sauk Stereo returns $300 of goods to PW Audio Supply and prepares the following entry to recognize the return. Accounts payable 300 May 8 Purchase returns and allowances 300 Purchase Returns and Allowances SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
59. Periodic Inventory System Illustration: On May 14 Sauk Stereo pays the balance due on account to PW Audio Supply, taking the 2% cash discount allowed by PW Audio for payment within 10 days. Sauk Stereo records the payment and discount as follows. Accounts payable 3,500 May 14 Purchase discounts 70 Purchase Discounts Cash 3,430 SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
60. Periodic Inventory System No entry is recorded for cost of goods sold at the time of the sale under a periodic system. Illustration: PW Audio Supply, records the sale of $3,800 of merchandise to Sauk Stereo on May 4 (sales invoice No. 731, Illustration 5-5) as follows. Accounts receivable 3,800 May 4 Sales 3,800 SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system. Recording Sales of Merchandise
61. Periodic Inventory System Illustration: To record the returned goods received from Sauk Stereo on May 8, PW Audio Supply records the $300 sales return as follows. Sales returns and allowances 300 May 4 Accounts receivable 300 Sales Returns and Allowances SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
62. Periodic Inventory System Illustration: On May 14, PW Audio Supply receives payment of $3,430 on account from Sauk Stereo. PW Audio honors the 2% cash discount and records the payment of Sauk’s account receivable in full as follows. Sales Discounts Cash 3,430 May 14 Accounts receivable 3,500 Sales discounts 70 SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
63. Comparison of Entries—Perpetual Vs. Periodic SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system.
64. SO 8 Explain the recording of purchases and sales of inventory under a periodic inventory system. Comparison of Entries—Perpetual Vs. Periodic
1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information)
Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of the affected employees. Gain or Loss - Volatility in pension expense can be caused by sudden and large changes in the market value of plan assets and by changes in the projected benefit obligation. Two items comprise the gain or loss: difference between the actual return and the expected return on plan assets and, amortization of the unrecognized net gain or loss from previous periods