Formulas and report orders Flashcards Preview

Principles of Accounting > Formulas and report orders > Flashcards

Flashcards in Formulas and report orders Deck (18):
1

Net Sales formula

Sales
- Sales Discounts
- Returns and Allowances

2

Net Delivered Cost of Purchases formula

Purchases
+ Freight In
- Purchases Returns and Allowances
- Purchase Discounts

3

Total Merchandise Available for Sale formula

Beginning Merchandise Inventory
+ Net Delivered Cost of Purchases

4

Cost of Goods Sold formula

Total Merchandise Available for Sale
- Ending Merchandise Inventory

5

Three elements needed to compute cost of goods sold?

1. beginning inventory
2. net delivered cost of purchases
3. ending inventory

6

What is the information progression in the Cost of Goods Sold section of a Classified Income Statement?

1. Computation of Net Delivered Cost of Purchases
2. Computation for Total Merchandise Available for Sales
3. Computation for Cost of Goods Sold

7

What one account related to Cost of Goods Sold is on both the income statement and balance sheet?

Merchandise Inventory

8

Gross Profit on Sales

difference between net sales and cost of goods sold

9

Net Income/Loss from Operations

Gross Profit on Sales - Total Operating Expenses = Net Income/Loss from Ops

10

Gross Profit Percentage

Gross Profit / Net Sales

11

What does Gross Profit Percentage tell us?

reveals amount of gross profit from each sales dollar

12

Working Capital

Current Assets - Current Liabilities = Working Capital

13

What does Working Capital tell us?

measures firm's ability to pay its current obligations

14

Current Ratio

current assets / current liabilities = current ratio

15

What does Current Ratio tell us?

measure of firm's abilities to pay it's debts by showing the amount of assets per dollar of current liability

16

Inventory Turnover

Cost of Goods Sold / Average Inventory

17

Average Inventory

(Beginning Inventory + Ending Inventory) / 2

18

What does Inventory Turnover tell us?

number of times inventory is replaced during accounting period