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Accounting 211 Financial and Managerial Accounting

Accounting 211 Financial and Managerial Accounting

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Accounting 211 Financial and Managerial Accounting

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  1. Accounting 211Financial and Managerial Accounting Teaching Assistant Hyun Jung (JoAnn) Lee

  2. Contents 1. Introduction 2. Review of Chapter5&6 3. Practice

  3. 1 Introduction

  4. Personal Blog : www.personal.psu.edu/hul152 Click on “ACCTG 211 Spring 2008” “Student Information Form”  Did you Bring IT!~^^* Office : 381A Business Building, 814-863-3796 Office Hour : 8 AM. ~ 10:00 AM on Tuesday Email : hul152@psu.edu Recitation Materials

  5. Let's follow WileyPLUS’s directions!!~ List expenses in order of magnitude List assets in order of liquidity and liabilities in order of magnitude, with notes payable first. This is a minor point so Professor won't do this on the exam.  No number Enter “0” in the table All boxes must be filled. Negative number Use the negative (-) sign preceding the number. $ and Commas(,).  Acceptable with and without dollar signs & commas WileyPlus Technical Issues

  6. P6-7 The inventory turnover ratio Calculate “Inventory Turnover Ration “ to one decimal place. Next you compute the days in inventory metric, using the just computed inventory turnover ratio already rounded to one decimal place.  BE SURE YOU FOLLOW THE DIRECTIONS.  WileyPlus Direction of 3rd HW

  7. When : February 13th 2008, 8:15 PM to 10:00PM Place : Posted on ANGEL & Check your Email!!~~ Section 04 : 121 Sparks Section 11 : 111 Forum Section 17 : 100 Thomas Go to the appropriate room according to your section. Anybody in the wrong room will lose 20 points on the exam. PSU ID, Pencils, and Calculator 1st Mid-term : February 13th

  8. Ask “W.G. Deng” for “PERMISSION” Contact Information Office : 350A Business Building Phone : 863-5467 Email : wxd139@psu.edu Office Hours : Mon & Thrs from 1pm until 3pm and by appointment. Only one chance to take it Makeup for the First Exam : Mar 1st on Saturday 9 AM. Makeup for the Second Exam : April 5th on Saturday Make-up Exam Assignments

  9. 2 Review of Chapter5 & 6

  10. Revenues Expenses Net Income Sales Cost of Goods Sold Income Statements Service Business Multistep Income Statement = Gross margin Operating Expenses +/- Other Rev & Exp = Income before taxes Income Taxes = Net income

  11. Sales Cost of Goods Sold Income Statements, conti. For the most part we simplify this to: Multistep Income Statement = Gross margin Operating Expenses = Net income

  12. Beginning inventory Add: Net Cost of Purchases = Goods available for sale Deduct: Ending inventory = Cost of goods sold Cost of Goods Sold (CoGS) • COGS implies we have some inventory to sell. • Here is how we derive CoGS: • Hint : Inventory T-Account 11

  13. Whoever owns the goods while they are in-transit pays for the shipping. Shipping costs to get the inventory IN are included as part of the cost of the inventory. Shipping costs for a sale (OUT) are part of operating expenses Shipping Costs

  14. 2/10, n/30 (for example) tells when and how much must be paid 2% discount if invoice paid in ten days but balance (i.e. n = net) is due in 30 days high interest cost of not taking purchase discounts Shipping Terms (Sales & Purchases) F.O.B. indicates when title to the goods changes hands (& who pays shipping) F.O.B shipping (freight in) F.O.B. destination (freight out) Terms of Sale and Purchases

  15. Calculating Net Cost of Purchases • Inventory is recorded at the price paid for it and should include • Invoice price, freight charges, inspection costs, and preparation costs. • Net Cost of Purchases = Purchases + Freight In 14

  16. Weighted Average Cost per unit = Cost of GAFS / # of units GAFS : Goods Available For Sales FIFO (First In First Out) Under FIFO, the first goods in inventory go to COGS The remaining goods are used to calculate Ending Inventory Cost LIFO (Last In First Out) Under LIFO, the last goods in inventory go to COGS The first goods in inventory are used to calculate Ending Inventory Inventory Cost Flow Methods

  17. Each of the methods is acceptable, and an argument can be made for using each. The choice of an inventory method will depend on management’s incentives, the tax laws, and the reporting company’s particular economic circumstances. FIFO would result in higher income. LIFO would reduce income taxes and provide better matching of current sales revenuewith current costs. Comparison of Methods

  18. Misstatements in inventory may cause errors in the following areas: Income Statement Cost of Goods Sold, Gross Margin, Net Income Balance Sheet Inventory, Payables, Retained Earnings Errors in Measuring Ending Inventory

  19. The # of items in ending inventory is determined at the end of the period by taking a physical count of the goods remaining on hand. Cost of goods sold is calculated at the end of the accounting period using the ending inventory count. Periodic Inventory Systems - The old

  20. The inventory account is continuously updated for the following items: Purchases Returns & Allowances Sales Cost of Goods Sold is calculated AT EACH SALE! A physical count of the inventory is still required (why?) Perpetual Inventory Systems – The New

  21. Chapter 2 Working capital Current ratio Debt to total assets ratio Earnings per share Chapter5&6 Inventory Turnover Ratio Gross Margin Ratio Profit Margin Ratio Analysis

  22. Ratio Analysis, conti.

  23. 3 Practice!!!

  24. Problem 5-8 Problem 6-5 Problem 6-6 3rd Homework Due Date : “Next Monday 6 PM.” Problem : Chapter5-P8, Chapter6-P4, and Chapter6-P7 Chapter5&6 : Practice A

  25. Do you have any questions? 381A Business Building 814-863-3796, hul152@psu.edu Welcome to Accounting World!!~