inventory transfers between related companies must be eliminated to avoid an overstatement of revenue and cost of goods sold in the consolidated income statement. In addition, when unrealized profits exist at the end of the period, the eliminations are needed to avoid overstating inventory and consolidated net income. Q6-2 An inventory transfer at cost results in an overstatement of sales and cost of goods sold. While net income is not affected, gross profit ratios and other financial statement
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basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system. 3. Explain the financial statement and tax effects of each of the inventory cost flow assumptions. 4. Explain the lower of cost or market basis of accounting for inventories. 5. Compute and interpret the inventory turnover ratio. 6. Describe the LIFO reserve and explain its importance for comparing results of different companies. Summary of Questions by Study Objectives and Bloom’s
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Business of Making Money So you want to make more money, but you don’t know how? This might be the response of most business owners in America today. In taking this course I learned what’s been referred to as King rule, that is, total revenues-total cost= profit. That’s how we make decisions in the business world. It’s so simple and efficient. Because we wake up every morning for money, it’s important to know how to get money. It’s essential to understand the equation and that is why I see it only fitting
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By | |1. Request that goods or services be |Purchase requisition |Sales manager | |ordered. | | | |2. Order goods or services. |Purchase order |Materials/crew manager | |3. Receive goods or services. |NONE
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CHAPTER 6- Cost of Goods Sold and Inventory CHAPTER OUTLINE Nature of Inventory and cost of goods sold Inventory represents products Held for resale and is classified as a current asset on the balance sheet. When companies sell their inventory to customers, the cost of the inventory becomes an expense called cost of goods sold. Cost of goods sold, cost of sales, or cost of merchandise sold, represents the outflow of resources caused by the sale of inventory and is the most important expense
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5—Inventory Merchandiser Makes a profit by buying and selling merchandise. A wholesaler is an intermediary that buys goods from manufacturers or other wholesalers and sells them to retailers or other wholesalers. A retailer buys goods from manufacturers or wholesalers and sells directly to consumers Operating cycle for Merchandisers Begins with the purchase of inventory and ends when cash is received from selling the inventory. Manufacturer Makes a profit by buying raw materials and transforming
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PROBLEMS: SET C Calculate ending inventory cost of goods sold for four inventory methods (LO 3) P6-1C Giles Manufacturing uses a periodic inventory system and has the following transactions for the month of June 2012: |Date |Transactions |Units |Cost per Unit |Total Cost | |June 1 |Beginning inventory |17 |$240 | |$ 4,080 | |June 7 |Sale
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a trading and profit and loss account and balance sheet for a selected business’s annotated final accounts. The trading account shows the business has made a gross profit before taking into account other expenses associated with the business such as overheads. The purpose of a profit and loss account is to: Show whether a business had made a profit or a loss over a given time period (e.g.financial year). Describe how the profit or loss arose (e.g. categorising costs between most of
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Question 1: Westwood’s Gross Margin Percentage is calculated as (sales less cost of goods sold) as a percentage of net sales revenue. For Westwood it’s calculated as follows based on the financial statements (all in millions of dollars): 2010 Gross Margin: (2000-1100) = 900 2010 Sales Revenue = 2000 2010 Gross Margin Percentage = 45% 2009 Gross Margin: (1500 – 800) = 700 2009 Sales Revenue = 1500 2009 Gross Margin Percentage = 46.7% Westwood’s Pre-Tax Return on Sales is calculated
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evaluate how economically balanced the company is. The intent of this document is to encourage the up gradation the standard of the spinning mills in our country and get a strong grip over the economic stability. To meet this objective, this report looks in depth towards decision making by using different tools and techniques of economics. Because it is important to look beyond just one measure in order to see a complete picture of the economic benefits and costs analysis of different activities are
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