Financial Accounting For Dummies From Financial Accounting For Dummies by Maire Loughran Financial accounting is the process of 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
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break up of Cost of Goods Sold. Typically in Costing based COPA, the values for key figures like Revenue, cost of goods sold, variances, overheads etc get stored in value field in CE1* tables. This essentially used to map the accounts such as revenue and sales deductions to value fields in costing based COPA. Additionally there were restrictions on the no of value fields in costing based copa with around 200 fields (SAP OSS Note 1029391). The account based COPA on the other hand uses cost elements
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on the objective Public vs. private accounting • When reporting to the public, a firm must follow GAAP. • In resolving internal disputes this may not always be true. Inventory 7 Overview In today’s class we will cover inventories: • Understanding the Inventory Equation • LIFO and FIFO cost-flow assumptions • LIFO tax conformity rule • Inventory accounting: IFRS vs. GAAP • Disclosures regarding cost flow assumptions 8 Two Main Issues Inventory accounting
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Financial Accounting Focuses on reporting to external users including investors, creditors, banks suppliers, & governmental agencies. Financial Statements must be GAAP based. Management Accounting Processes of measuring, analyzing, and reporting financial & non-financial information that help managers make decisions to fulfill the goals of an organization. Managers use management accounting information to: 1. Develop, communicate, and implement strategies 2. Coordinate
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Audit Chapter 5 Review 1. A business process is the set of connected activities linked with each other for the purpose of achieving an objective or goal. 2. Two general types of business processes are present in most organizations that deliver goods and services: the operating processes and the management and support processes. The operating processes include strategic planning, product and service design and development, marketing, production/delivery, invoicing, and collection. The management
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consisting of goods that are available for resale to customers. Manufacturers also maintain three components of inventory which consist of finished goods these are goods that have been completed and are awaiting sales. Manufacturers may also have work in process inventory made up goods being manufactured but not yet completed. The third category of inventory is raw material, consisting of goods that are to be used in producing products. Overall, inventory should include all cost that are both
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Inventory Auditing Inventory Auditing Inventory is tangible goods held by a company to support production, support activities or for sale or customer service. They are comprised normally of parts, tools, maintenance supplies, raw materials, work in progress, finished goods and waste or by-products (Inventory, 2012). Inventory is often the main item in the current assets category, and must be accurately counted and valued at the end of the accounting period to ascertain
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1-One can determine the cost of goods sold when using a periodic inventory system does not calculate the cost of goods sold until the end of the period. At the end of the period a count is done to determine the ending balance of the inventory. After this is completed the cost of goods sold 2- The perpetual system of inventory keeps a running tally of inventory that is live and this is done by automatically making changes to the inventory as each item is sold, freight cost, returned, or 3-
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to the company’s current situation. In the early 1980s, management closed down the last manufacturing operations in Nashua. Labor costs in Japan, and later in China, had historically been well below those in the United States, so it made sense to outsource manufacturing to Japanese and, later, Chinese manufacturers. Even with shipping costs, the mowers’ variable cost was substantially less
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1. Why do most companies adhere to GAAP for their basic internal financial statements? a. GAAP is required by law for publicly held companies. b. To use GAAP and another system of reporting would be too costly for most companies. c. Accountants are required by their code of ethics to use GAAP accounting. d. Accrual accounting provides a uniform way to measure an organization’s financial performance. 2. The primary users of information provided by a management
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