ACC 201 Cheat Sheet

by kmell via cheatography.com/48729/cs/13697/

Inventory Management Decisions Sales Transa​ctions JOURNAL ENTRY EXAMPLES

Primary goals of management decisions: FOB Shipping Point FOB Destin​ation BAD DEBT EXPENSE: debit bad debt
expense, credit allowance
1. Maintain sufficient quantity to meet customer FOB Shipping: sale recorded when goods leave
needs seller's shipping department CASH COLLEC​TIONS: debit cash, credit A/R
2. Ensure quality meets customers FOB Destin​ation: sale recorded when goods CREDIT SALES: debit A/R and credit
expect​ations reach destin​ation
WRITE OFFS: debit allowance, credit A/R
3. Minimize costs of gettin​g/c​arrying inventory
FORMULAS
Reporting Inventory
COGS = COGA - COGA = BI +
Income Statement: once Balance Sheet: EI PURCHASES
items are sold, you remove inventory is set
GROSS PROFIT INTEREST = PRINCIPAL
cost of goods sold from up as an asset
= SALES - X INTEREST RATE X
income statement when purchased COGS TIME

NET RELIZABLE VALUE: A/R TOTAL -

Percentage of Credit Sales v Aging of A/R
ALLOWANCE TOTAL
% (income statement method) easier to
compute; aging (balance sheet method) is Types of Inventory
more accurate
Mercha​ndisers Manufa​cturers
income statement method: begin by writing
journal entries in problem Mercha​ndi​sers: buy + sell finished goods
Manufa​ctu​rers: buy raw materials + produce
balance sheet method: begin by making a chart
and sell finished goods
(raw materials, work in process, and finished
STEPS TO FIFO/L​IFO​/WE​IGHTED AVERAGE goods)

FIFO LIFO WEIGHTED

AVERAGE Perpetual VS Periodical Inventory Systems

STEP 1: STEP 1: STEP 1: SAME Perpetual: recorded Period​ical: always

begin by SAME AS AS FIFO AND every time item is updated at the end of
doing FIFO STEP LIFO STEP 2: bought​/so​ld/​ret​urned; accounting period;
COGA. 2. DIVIDE COGA uses bar codes like require inventory to
STEP 2: REMEMBER BY NUMBER OF Walmart; constantly be counted at the end
when TO DO UNITS recording inventory of every period
determ​ining LAST-I​N- AVAILABLE
COGS, F​IRS​T-OUT STEP 3. USE Financial Statement Effects (rising prices)
remember THE NUMBER
FIFO: COGS smaller than LIFO, Gross Profit
to do TO FIND COGS
FIRST-​IN-​F AND COST OF larger than LIFO, Net Income larger than LIFO,

IR​ST-OUT ENDING Inventory larger than LIFO

INVENTORY LIFO: COGS larger than FIFO, gross profit

smaller than FIFO, Net income smaller than
FIFO, inventory smaller than FIFO

By kmell Published 28th November, 2017. Sponsored by Readability-Score.com

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