BUS 2101 Decision Making Financial Information Financial Statement Analysis Financial Statements GAAP Income Statement Statement of Cash Flow Balance Sheet.

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Presentation transcript:

BUS 2101 Decision Making Financial Information Financial Statement Analysis Financial Statements GAAP Income Statement Statement of Cash Flow Balance Sheet Statement of Retained Earnings Preparation Annual Reports Management Discussion Notes Auditor’s Report Ratios Liquidity Profitability Solvency Market Users External Internal Business Activities Operating Investing Financing The Big Picture…

Merchandising Operations Inventory systems Purchases of merchandise Sales of merchandise Income statement for merchandisers

Inventory systems Inventory Systems Perpetual Keep track COGS each sale Periodic Count at end COGS at end

Purchase of merchandise Perpetual Merchandise Inventory680 A/P680 Use Merchandise Inventory account for only inventory, not supplies, equipment, etc.

Return of merchandise purchases Perpetual A/P680 Merchandise Inventory680

Freight on merchandise purchased Perpetual Merchandise Inventory10 A/P10 Freight for merchandise purchased is part of the cost of an asset, Merchandise Inventory

Freight on merchandise sold Perpetual Freight expense10 A/P10 Freight for merchandise sold is an expense.

Purchase discounts Perpetual A/P100 Cash Merchandise Inventory 98 2 Discount for 2/10, n/60. Reduces cost of inventory.

Sales of merchandise Perpetual A/R100 Sales (Revenue)100 Cost of goods sold60 Merchandise Inventory60

Returns of merchandise sold Perpetual Sales R&A50 A/R50 If merchandise is o.k. Merchandise Inventory20 COGS20 Negative revenue

Sales discounts Perpetual Cash Sales Discounts 98 2 A/R100 Sales Discounts is a negative revenue account.

Income Statement Merchandiser Net sales100,000 Cost of goods sold60,000 Gross profit40,000 Selling and admin expenses25,000 Net income15,000

Income Statement Merchandiser Acme Anvils Aggie Anvils Sales100,000200,000 Sales returns and allowances 1,000 80,000 Sales discounts 2,000 22,000 Net sales 98,000 What conclusions can you make about Aggie Anvils?

BUS 2101 Decision Making Financial Information Financial Statement Analysis Financial Statements GAAP Income Statement Statement of Cash Flow Balance Sheet Statement of Retained Earnings Preparation Annual Reports Management Discussion Notes Auditor’s Report Ratios Liquidity Profitability Solvency Market Users External Internal Business Activities Operating Investing Financing The Big Picture…