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week 6

by: Taylor Knecht
Taylor Knecht

ACTG 201 Intro to Financial Accounting
Loretta Backstrom

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ACTG 201 Intro to Financial Accounting
Loretta Backstrom
Class Notes
accounting 201 montana state university loretta backstrom intro to financial accounting
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This 4 page Class Notes was uploaded by Taylor Knecht on Saturday October 10, 2015. The Class Notes belongs to ACTG 201-04 at Montana State University - Bozeman taught by Loretta Backstrom in Summer 2015. Since its upload, it has received 20 views. For similar materials see ACTG 201 Intro to Financial Accounting in Business at Montana State University - Bozeman.


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Date Created: 10/10/15
Week 6 Identify sections of a classi ed balance sheet Presents snapshot in point of time improve understanding by grouping similar assets and liabilities together Standard classi cations assets current assets ong term assets property plant and equipment intangible assets patents franchise brands iabiitiesowner39s equity current liabilities ong term owner sstockholders equity Record sales under perpetual inventory system made using cash or credit saes revenue like service revenue is recorded when performance obligation is satis ed performance obligation is satis ed when goods are transferred from seller to buyer journals to record sales Cash or accounts recievable xxx Sales revenue xxx Cost of goods sold xxx Inventory xxx Assets quot revenue quot expense quot inventory v Sales returns and allowances contra revenue account to sales revenue debit sales not reduced because it obscures relevance of returnsallowances coud distort stats and comparisons Sales returns and allowances xxx Accounts receivable xxx Inventory xxx Cost of goods sold xxx Sales discount offered to customers to encourage prompt payment of debts contra revenue to seller Contra revenue are not expenses but are treated as such when closing Cose owners capital and owners draws separately Multi step income statement Key items net sales gross pro t calcuations on the left totals on the right operating expenses non operating activities interest revenues dividend revenues rent revenue gain from sale of assets casualty loss interest expense oss from abandonment oss from strike Inventories objectives 1 How to classify and determine inventories 2 Apply inventory of cost ow methods and discuss nancial effects 3 Indicate effects of inventory errors on nancial statements 4 Explain nancial statement presentation and analysis Classifying inventory Merchandising one class inventory Manufacturing three classes raw materials Work in progress as the raw materials are being used construction work in progress for example nished product cost of materials historical cost Determining inventory quality Perpetual system 1 Check accuracy of inventory records 2 Determine amount of inventory lost due to wasted raw materials shoplifting or employee theft Periodic system 1 Determine inventory on hand 2 Cost of goods sold in period Determining ownership of goods in transit purchased goods not yet received sod goods not delivered goods in transit should only be included if the company has legal title to goods legal title determined by terms of sale Goods in transit FOB shipping point Ownership of goods passes to buyer when public carrier accepts good from seller FOB Destination Ownership of goods remains with seller until it reaches buyer Consignment goods to hold goods of others and try to sell the goods for a fee but without taking ownership of the goods Many car boat and antique dealers sell goods on consignment Fee revenue Cash Fee revenues Consignment sales Accounts payable Inventory accounted for at purchase cost Cost includes all expenditures necessary to acquire goods and place them in ready condition for sale Unit cost applied to quantities to compute total cost of inventory and cost of goods sold using following costing methods Speci c identi cation FlFO rst in rst out FlLO rst in last out Cost ow assumptions Do not need to be consistent with physical movement of goods BI and purchases Goods available for sale Beginning inventory purchases ending inventory cost of goods sold


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