ACC* - Accounting ACC* M115 Lecture Notes - Lecture 24: Income Statement, Debits And Credits, Current Asset

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redminnow421

5 Oct 2020

School

CCC

Department

ACC* - Accounting

Course

ACC* - Accounting ACC* M115

Professor

Murphy

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Document Summary

For merchandiser primary source of revenue is sale of merchandise. Expenses are divided into 2 categories: cost of goods sold total cost of merchandise sold during the period, operating expenses eg. Operating expenses of merchandiser are same as expenses in service company. Gross profit is reported in the income statement. After gross profit is calculated deduct operating expenses to determine net income or net loss. Operating cycle is generally longer for merchandiser than a service company because they have to buy inventory and then sell the merchandise. Merchandise inventory - it is a current asset. Inventory systems - merchandisers keep track of their inventory using one of two systems: perpetual system detailed records of cost of each type of merchandise purchased, periodic system do not keep detailed records throughout period. Cost of goods sold is determined each time there is a sale. goods sold only at the end of the period.

Related Questions

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:


Sales	$	270,000
Beginning merchandise inventory	$	18,000
Purchases	$	180,000
Ending merchandise inventory	$	9,000
Fixed selling expense	$	?
Fixed administrative expense	$	10,800
Variable selling expense	$	13,500
Variable administrative expense	$	?
Contribution margin	$	54,000
Net operating income	$	16,200

2. Prepare a traditional format income statement.

Todrick Company
Traditional Income Statement
Sales
Cost of goods sold
Gross margin		0
Selling and administrative expenses:
Selling expense
Administrative expense

		0
Net operating income

scarletmarten695

QUESTION 1

The ownership of a corporation is represented by:

		shares of stock.
		the owner's capital account.
		the revenue account.
		cash in bank account.

QUESTION 2

How many classifications does a Capital Stock Account have?

		One
		Two
		Three
		Four

QUESTION 3

The equity contributed by stockholders and equity earned throughbusiness profits represent the stockholders' equity for a:

		partnership firm.
		sole proprietorship.
		corporation.
		none of these.

QUESTION 4

Retained earnings are a part of a/an:

		asset account.
		permanent account.
		stockholders' equity account.
		temporary account.

QUESTION 5

How many sections does an Income Statement have?

		Two
		Three
		Four
		Five

QUESTION 6

Net sales are related to the:

		net income section.
		gross profit on sales section.
		revenue section.
		cost of merchandise sold section.

QUESTION 7

Sales discount and sales return and allowance are:

		revenue accounts.
		contra revenue accounts.
		permanent accounts.
		contra expenses accounts.

QUESTION 8

The total cost related to merchandise purchases during anaccounting period is the:

		net purchase.
		cost of merchandise sold.
		cost of merchandise available for sale.
		beginning merchandise inventory.

QUESTION 9

The gross profit on sale is $65,000, and operating expenses is$35,000. What will be the operating profit?

		$65,000
		$35,000
		$100,000
		$30,000

QUESTION 10

A balance sheet has the following sections:

		Assets, liabilities, and stockholders' equity.
		Income, expenses, and stockholders' equity.
		Assets, liabilities, and income.
		Operating income, operating expenses, and stockholders'equity.

QUESTION 11

A cash flow statement is used to assess the:

		net increase or decrease of cash.
		net increases of cash only.
		net decrease of cash only.
		net profit or loss of business.

The income statement of Vince Gill Company is shown below.

	Vince Gill Company
	Income Statement
	For year ended December 31, 2014
Sales Revenue		$6,947,090
Cost of Goods Sold
Beginning inventory	$1,890,710
Purchases	4,323,810
Goods available for sale	6,214,520
Ending inventory	1,601,450
Cost of goods sold		4,613,070
Gross Profit		2,334,020
Operating expenses
Selling expenses	446,970
Admin expenses	709,920	1,156,890
Net income		1,177,130

1.		Accounts receivable decreased $316,040 during the year.
2.		Prepaid expenses increased $175,400 during the year.
3.		Accounts payable to suppliers of merchandise decreased $283,580during the year.
4.		Accrued expenses payable decreased $115,830 during theyear.
5.		Administrative expenses include depreciation expense of$54,760.

Prepare the operating activities section of the statement ofcash flows using the direct method.

rubymouse253

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 24: Income Statement, Debits And Credits, Current Asset

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