business. However, sales between years 7 and 8 demonstrate a decrease in net sales of -15% or $897,000. This is a weakness due to the overall sales being down. Cost of Goods Sold between years 6 and 7 demonstrates an increase of 31.8% or $1,048,000. The costs associated with manufacturing goods are always going to be a big expense. While the cost associated may appear to be a weakness for the company, it actually demonstrates strength for the company. The reason being is the percent change in sales
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Memorandum To: Wiki Art Gallery, Inc. – Stephen Conley CC: Rob Wilco From: Andrew Schechter Accounting Firm Date: [ 11/8/2012 ] Re: Financial Reporting Evaluations Confidential To whom it may concern, Our firm was given the task of identifying and evaluating the financial reporting choices attributable to the current financial condition of Wiki Art Gallery, Inc. (WAG). Our opinions/recommendations are unbiased and we believe are representative of Generally Accepted Accounting Principles
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1. Parent purchased Subsidiary on January 1, 2014. The excess of investment cost over book value of $210,000 was allocated entirely to a 10-year royalty agreement. Subsidiary regularly sells merchandise to Parent. In 2015, inter-company sales amounted to $123,960, with $27,558 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $40,300. In 2016, inter-company sales amounted to $123,960 with $35,330 of deferred profit remaining in ending
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chapter The Equity Method of Accounting for Investments The first several chapters of this text present the accounting and reporting for investment activities of businesses. The focus is on investments when one firm possesses either significant influence or control over another through ownership of voting shares. When one firm owns enough voting shares to be able to affect the decisions of another, accounting for the investment can become challenging and complex. The source of such complexities
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Chapter 5 REVENUE AND MONETARY ASSETS Changes from Tenth Edition The chapter has been updated. The SEC’s SAB101 Revenue Recognition tests have been added. Approach The sequence of transactions for accounts receivable and bad debts often causes difficulty; indeed, the time that one is sometimes forced to spend on this topic is all out of proportion to its importance. Students often do not understand why an Allowance for Bad Debts account is necessary at all; they do not grasp the notion
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(FIFO) 3. Last-in, First-out (LIFO) 4. Average Cost Method Each affects the valuation of inventory and the cost of goods differently. Specific identification method, although the most accurate method, it is not practical for large volume inventories that are of similar products. FIFO is a cash flow assumption that assumes earlier goods purchased by a company are the first ones to be sold. So the oldest items are allocated to cost of goods sold and the newer items make up the ending inventory
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8394d_c08.qxd 6/11/02 12:30 PM Page 345 mac62 mac62:1253_GE: Accounting for Inventories Inventories in the Crystal Ball Policy makers, economists, and investors all want to know where the economy is headed. For example, if the economy is headed for a slow-down, it might be prudent on the part of the Federal Reserve to cut interest rates or for Congress to consider a tax cut to head off an economic downturn. Information on inventories is a key input into various decision makers’
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Accounting Practices 1 Accounting Practices and Entries Axia College of University of Phoenix Angela Sherrell HCA/270 July 4, 2010 Accounting Practices 2 Business owners view companies as similar to human beings. As people visit their doctors regularly to help maintain their physical health, business owners have to monitor their business’s health on a regular basis. Accounting, which is defined as “the process of identifying, measuring, and communicating economic information
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to calculate the value of the goods in inventory. By reporting and analyzing such information, a company can help to predict financial performance and the best plan to achieve results. Such inventory valuation methods include: Average Cost Method; FIFO; and LIFO. The inventory valuation methods use two different inventory systems – perpetual and periodic. The perpetual inventory system is used when a company reports the cost of goods sold as those goods are sold throughout the accounting period
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Chapter 3 Substance of Transactions 1. Objectives 1.1 Understand the meaning of substance of transactions. 1.2 Understand and apply the principle of substance over form. [pic] 2. Introduction 2.1 Both the HKICPA’s framework and HKAS 1 state that transactions and events should be accounted for and presented in accordance with their substance and economic reality, and not merely their legal form. 2.2 As yet the HKICPA does not have one standard that brings together all aspects of substance
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