ACCT 217 Lecture 4: ACCT_Lecture 4
24 Jan 2019
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Revenues (-) cogs (-) op costs = oeprating profit (ebit) (-) interest expense = ebt (-) taxes (ni, multi-step, revenue - expenses --> ni (single step) Physical product companies vs service companies: physical product - largest asset in inventory, cogs is the largest cost items. Every number is an estimate exact cash balance. Inventory accounts adjusts all the expenses regarding the stocking of items such as tires: you pay all the costs after buying, perpetual means always om. Inventory in terms of money: accumulation of costs, all the costs required - i. e. transportation etc, you purchase, add to it, discounts or allowances. Inventory is always perpetual: companies give the 2/10 discount because cash is not blocked, you need to cash or you become bankrupt. Seller can recognize revenue only when obligations are complete: carriage, insurance, freight costs are all included in contract/inventory.
