University:
Fort Hays State University
Course:
ACCT 412 | Auditing
Academic year:

2020
Views:

289

Pages:

9
Author:

Nesbyenvkk

Chapter 5 - Multiple-Step Income Statements Flow of Costs + Inventory Systems Sales Revenue [Green box] less [Black arrow] COGS [Blue box] equals Gross [Green box] Profit less [Black arrow] Operating [Green box] equals Net [Green box] Expenses income Beginning [Grey box] Inventory Cost of goods [Grey box] purchased [Black arrow] Cost of Goods [Green box] Available for sale [Black arrow] Cost of [Blue box] goods sold Ending [Blue box] Inventory Purchases of Inventory (buyer viewpoint) [Yellow highlight] action: entry: purchase Inventory Inventory XXX Accounts Payable XXX freight cost Inventory XXX Cash XXX return Accounts Payable XXX Inventory XXX discount Accounts Payable XXX Cash XXX Inventory XX Sales of Inventory (Seller viewpoint) [Yellow highlight] sale Accounts receivable XXX Sales Revenue XXX COGS XXX Inventory XXX discount Cash XXX Sales Discount* XX Accounts Receivable XXX / Sales returns & allowances* XXX return { Accounts Receivable XXX Inventory XXX COGS XXX *both CONTRA-REVENUE accounts* [Red text] Single-Step Income Statement Revenues: ~~~ X ~~~ X ~~~ X XX Costs + Expenses ~~~ X ~~~ X ~~~ X (xx) Net income: $ === Multiple-Step Income Statement Sales Revenue XXXX Less: Sales returns+allowances (xxx) Sales discount (xx) Net Sales Revenue XXX COGS (xxx)