concept summary for exam 2 Flashcards
gross profit ratio
gross profit/sales revenue
what does gross profit ratio tell you
how much profit a company makes after paying off its Cost of Goods Sold (COGS).
revenue recognition guidelines
revenue is recognized when produce/service is earned not when cash is received.
called deffered revenue becase payment is payed in advanced for good received later
accrued reveue is when service is provided before cash payed
do accrued and deferred revenue exist in cash basis accounting
no because revenue is only recognied when cash changes hands
inventory turnover ratio (INVT)
COGS/average inventory
what does INVT tell us
measures how efficiently a company manages its turnover and sells its products
days inventory on shelf
365/INVT
what does decreasing turnover indiate
the supply chain management is faltering and there is a decrease in demand for product
periodic system
record revenue at end of period
how do you calculate ending inventory and COGS
beginning inventory + purchases = total avilable for sale
what does total available for sale split into
COGS (expenses) and ending inventory (asset)
know SAPID
ok look at chapter 6 slides cards
know how to do bank account reconcilation
ok
know cash basis accounting vs accrual method
ok
LIFO know
ok
