Show Menu

ACC 201 Cheat Sheet by

accounting exam 3
accounting

Inventory Management Decisions

Primary goals of management decisions:
1. Maintain sufficient quantity to meet customer needs
2. Ensure quality meets customers expect­ations
3. Minimize costs of gettin­g/c­arrying inventory

Reporting Inventory

Income Statement: once items are sold, you remove cost of goods sold from income statement
Balance Sheet: inventory is set up as an asset when purchased

Percentage of Credit Sales v Aging of A/R

% (income statement method) easier to compute; aging (balance sheet method) is more accurate
income statement method: begin by writing journal entries in problem
balance sheet method: begin by making a chart

STEPS TO FIFO/L­IFO­/WE­IGHTED AVERAGE

FIFO
LIFO
WEIGHTED AVERAGE
STEP 1: begin by doing COGA. STEP 2: when determ­ining COGS, remember to do FIRST-­IN-­FIR­ST-OUT
STEP 1: SAME AS FIFO STEP 2. REMEMBER TO DO LAST-I­N-F­IRS­T-OUT
STEP 1: SAME AS FIFO AND LIFO STEP 2: DIVIDE COGA BY NUMBER OF UNITS AVAILABLE STEP 3. USE THE NUMBER TO FIND COGS AND COST OF ENDING INVENTORY
 

Sales Transa­ctions

FOB Shipping Point
FOB Destin­ation
FOB Shipping: sale recorded when goods leave seller's shipping department
FOB Destin­ation: sale recorded when goods reach destin­ation

FORMULAS

COGS = COGA - EI
COGA = BI + PURCHASES
GROSS PROFIT = SALES - COGS
INTEREST = PRINCIPAL X INTEREST RATE X TIME
NET RELIZABLE VALUE: A/R TOTAL - ALLOWANCE TOTAL
 

Types of Inventory

Mercha­ndisers
Manufa­cturers
Mercha­ndi­sers: buy + sell finished goods
Manufa­ctu­rers: buy raw materials + produce and sell finished goods
(raw materials, work in process, and finished goods)

Perpetual VS Periodical Inventory Systems

Perpetual: recorded every time item is bought­/so­ld/­ret­urned; uses bar codes like Walmart; constantly recording inventory
Period­ical: always updated at the end of accounting period; require inventory to be counted at the end of every period

Financial Statement Effects (rising prices)

FIFO: COGS smaller than LIFO, Gross Profit larger than LIFO, Net Income larger than LIFO, Inventory larger than LIFO
LIFO: COGS larger than FIFO, gross profit smaller than FIFO, Net income smaller than FIFO, inventory smaller than FIFO

JOURNAL ENTRY EXAMPLES

BAD DEBT EXPENSE: debit bad debt expense, credit allowance
CASH COLLEC­TIONS: debit cash, credit A/R
CREDIT SALES: debit A/R and credit
WRITE OFFS: debit allowance, credit A/R

Download the ACC 201 Cheat Sheet

1 Page
//media.cheatography.com/storage/thumb/kmell_acc-201.750.jpg

PDF (recommended)

Alternative Downloads

Share This Cheat Sheet!

 

Comments

No comments yet. Add yours below!

Add a Comment

Your Comment

Please enter your name.

    Please enter your email address

      Please enter your Comment.

          Related Cheat Sheets

          Nature of Business and Accounting Cheat Sheet
          Accounting Principles and Business Transactions Cheat Sheet