Year ended 31 December 2010 | | Sales | | | | 300,000 | | Less | | | | | | Cost of Goods | | | 180,000 | | Gross Profit | | | | 120,000 | Less Expenses | | | | | Selling, General and administrative expenses | 24,000 | | Interest Expenses | | | 16,000 | | Profit before tax | | | | 80,000 | Income Tax Expense | | 28,000 | | Net Profit | | | | 52,000 | Statement of changes in owners’ equity Sunshine
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Company Info Lads and Lassies (L&L), an Security Exchange Commission (SEC) registrant, manufactures and sells exclusive children’s clothing to the most discerning clientele. Its products offer high quality and modern style, including everything from a colorful collection of cashmere sweaters to perfect vintage washed tees. The products are sold through its boutiques, each of which resembles a New England seaside cottage. The boutiques also include Sassy Spa, which was introduced in the third
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sales infuse the company with money and allow the company to continue to fund its development of new products and grow the company. From year 7 to 8 there is an increase cost of goods sold of 31.8%. This may appear to be a bad thing because increasing costs are usually not what a company wants to do. However, in this instance the increased costs are a welcome sight because of the increase productivity and sales. As an added bonus to this strength the company is increasing costs at a slower pace than
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completion-of-production basis. F 15. Recording a loss on an unprofitable contract. F 16. Deferring revenue under installment-sales method. T 17. Deferring gross profit under installment-sales method. T 18. Classification of deferred gross profit. F 19. Recognizing revenue under cost-recovery method. T 20. Recognizing profit under cost-recovery method. Multiple Choice—Conceptual Answer No. Description c 21. Revenue recognition principle. b 22. Definition of "realized." a 23
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Profitability: The ratios in this section measure the ability of the business to make a profit. Sales Growth COGS to Sales Gross Profit Margin SG&A To Sales Net Profit Margin Return On Equity Return On Assets Page 6 - 7 Efficiency: Also called Asset Management ratios. Indicator of how efficiently the company manages its assets. Days In Receivables Accounts Receivable Turnover
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preparing financial statements for a business. The three key financial statements are the income statement, balance sheet, and statement of cash flows, and they serve two broad purposes: to report on the current financial position of the company, and to show how well the company performs over a period of time. Investors, creditors, and other interested parties rely on such information to find out whether a business is making or losing money, and they depend on financial accountants to help ensure that these
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Index Cost Classification…………………………………………………………………2 Cost Volume Profit analysis……………………………………………………….2 Contribution Margin……………………………………………………………….2 Gross Margin and Contribution Margin…………………………………………...3 CVP Relationship in Graphic Form……………………………………………….3 CM Ratio. …………………………………………………………………………3 Application of CVP Concepts……………………………………………………..4 Importance of CM…………………………………………………………………4 Break-even Analysis………………………………………………………………4 Target Profit Analysis…………………………………………………………….5
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issues for the customer. Adjusting lower cost of inventory on market valuation, interest Capitalizing on building construction, Recording gain or loss on asset disposal and finally the theme adjusting for goodwill impairment Adjusting lower cost in market inventory on valuation Inventories are necessary for companies because it is a fundamental part of the business operation. They seek to retain control of the articles of tangible property of a company. These items range from the material for the
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and out of the business because if they don’t do that then things could go wrong with payments and could lead to losing money. So it is important for them to record all the payments in the business so it is stable. Also recording the transactions is good because it ensures the business is organised and up to date with everything that has gone in and out of the business. For example if Tesco didn’t do this then it might lead to their tax payments being wrong. This would mean that they would be in trouble
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of the company that gives a future economic benefit. Inventories are assets because they give future benefits to the company in the terms of sales revenue. Absorption costing: includes all manufacturing costs --- including direct materials, direct labor, and BOTH variable and fixed manufacturing overhead. Absorption Costing = Full Costing Under absorption costing, fixed overhead is a product cost until sold. Absorption costing makes no distinction between fixed and variable costs thus is
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