* The installment sales and cost recovery methods are only used in unusual circumstances Profit recognition by the full accrual method is appropriate provided: * The profit is determinable * The earnings process is virtually complete * Unless both of the above conditions exist, recognition of all or part of the profit shall be postponed and other methods of profit recognition shall be followed Installment Sales Method * Recognizes revenue and costs only when cash payments are received
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Introduction: MARGINAL COST: Marginal Cost is the additional cost of producing an additional unit of product. In simple, marginal cost is the extra cost of an extra unit of production. It is the total of all variable costs. It composed of all direct costs and variable costs. The CIMA, London, defines marginal cost “as the amount at any given volume of output by which aggregate costs are changed, if volume of output is increased or decreased by one unit”. In other words, it is the cost of one unit of
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Chain Digest. The inventory system and the related cost of sales are accounted for under the retail inventory accounting method (RIM). Since a physical inventory is taken only quarterly or once a ye ar, Target uses the last-in, first out (LIFO) method. The inventory is stated at the lower of LIFO cost or market meaning if the cost of the replacing inventory is lower than its recorded purchase cost, this method is used to value the inventory. Cost includes purchase price as reduced by vendor income
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statements are prepared under the historical cost convention on an accrual basis, in accordance with the generally accepted accounting principles (a) Change in accounting policy The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below. Up to the year ended the Company was recognizing dividend declared by subsidiary companies after the reporting date in the current year’s statement
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typically classified within generic functions as either program or support services. Program services relate to the mission or service delivery objectives of the organization, while support services relate to costs that indirectly support the organization's mission such as general and administrative costs, fund raising, membership development, etc. Of the four expenses listed in the fact pattern, two are clearly support services as follows: Fundraising Management and general Total $250,000 200,000 $450,000
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years 6 and 7. This was a 33.3% increase for Competition Bikes. The cost of goods sold increased $1,048,000. This was a 31.8% increase. The fact that net sales increased by 33.3%, and cost of goods sold increased by only 31.8% was a significant factor in these two years. This was a positive result, because net sales increased more than what the cost of goods sold increased. Competition Bikes found a way to sell more bikes at a lower cost for the company. This is why the company had an increase of 37.5%
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profits and cash flows in 1984. Harnischfeger made the following changes in accounting policy and estimates: Harnischfeger made changes regarding the recognition of some types of sales. They decided to include products bought from Kobe Steel Ltd. and sold by them to be in its net sales, effective November 1983. Before that, only gross margin from products bought from Kobe was included. The company claimed that they wanted to present more fairly the nature of the business transactions with Kobe. Therefore
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applications of standard costing, there are substantially more situations where it is not a viable costing system. Here are some problem areas: ▪ Cost-plus contracts. If you have a contract with a customer under which the customer pays you for your costs incurred, plus a profit (known as a cost-plus contract), then you must use actual costs, as per the terms of the contract. Standard costing is not allowed. ▪ Drives inappropriate activities. A number of the variances reported under a standard
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Summit Distributors Case Summit Distributors Case Summit Distributors Case The Summit Distributors case takes a look at a large global company in the distribution industry. With their company positioned within the industrial sector of the industry, they are susceptible to cyclical pressures when the economy slows. In the current environment, growth has slowed and Summit Distributors is concerned about meeting the covenants in their agreement with Prime Trust Bank as their earnings have fallen
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consultants for a new retail company, B.A.S.S. Customized Jewelers, our recommendations for reporting and valuing various assets of the business, as well as inventory policy, capitalization policy, and how these policies will help the company succeed are presented here. In this line of business, demonstrations of depreciation method recommendations are critical to show the inventory allocation and asset costs over the life of the inventory. Lastly, an examination of the policies and alternative valuation
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