Accounting Flashcards
What is accounting?
Process of recording, classifying, summarizing financial transactions.
What is credit?
Used by retail businesses, It is to pay for inventory at a later date. If paid early they usually receive a discount.
How do you find Inventory sold or cost of goods sold? (COGS)
Inventory purchases - remaining inventory = inventory sold
How do u find COGS (cost of goods sold)?
B.I + purchases = COGA
COGA - E.I = COGS
What is gross profit?
Amount of lonely left over from sales/revenue after deducting COGS
How do you calc gross profit?
Sales Revenue - COGS = Gross profit
How do you find net income/profit?
Gross profit - expenses = net income/profit
What is net income?
Amount that the store owner can declare for income tax purposes
What are the 3 types of businesses
Service , retail , manufacturing
Which type of business has the most complex form of accounting?
Manufacturing
What is GIP(WIP)?
Goods that are partially finished
What is direct labour?
Labour involved in making the good; this is a cost of making the good
What are the 4 components involved in creating products?
- Raw materials inv
2.GIP (WIP) - Finished goods inv
- Direct labour
What is an income statement?
Financial statement that shows a businesses profitability over a stated period of time
What is included in a income statement for service businesses?
Revenue and expenses
