Flashcards in Formulas and report orders Deck (18):
Net Sales formula
- Sales Discounts
- Returns and Allowances
Net Delivered Cost of Purchases formula
+ Freight In
- Purchases Returns and Allowances
- Purchase Discounts
Total Merchandise Available for Sale formula
Beginning Merchandise Inventory
+ Net Delivered Cost of Purchases
Cost of Goods Sold formula
Total Merchandise Available for Sale
- Ending Merchandise Inventory
Three elements needed to compute cost of goods sold?
1. beginning inventory
2. net delivered cost of purchases
3. ending inventory
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
What one account related to Cost of Goods Sold is on both the income statement and balance sheet?
Gross Profit on Sales
difference between net sales and cost of goods sold
Net Income/Loss from Operations
Gross Profit on Sales - Total Operating Expenses = Net Income/Loss from Ops
Gross Profit Percentage
Gross Profit / Net Sales
What does Gross Profit Percentage tell us?
reveals amount of gross profit from each sales dollar
Current Assets - Current Liabilities = Working Capital
What does Working Capital tell us?
measures firm's ability to pay its current obligations
current assets / current liabilities = current ratio
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
Cost of Goods Sold / Average Inventory
(Beginning Inventory + Ending Inventory) / 2