Accounting Concepts and Calculations: A Comprehensive Guide
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Accounting Concepts and Calculations
1. Income Statement
- Gross Sales: Total sales before any deductions.
- Returns: Deducted from gross sales to calculate net sales.
- Cash Discounts: Deducted from gross sales to calculate net sales.
- Net Sales: Gross sales minus returns and cash discounts.
- Cost of Goods Sold (COGS): The cost of the goods sold during the period.
- Other Expenses: Expenses not related to COGS.
- Profit Before Tax: Net sales minus COGS and other expenses.
- Tax Expense: Taxes owed on profit before tax.
- Net Income: Profit before tax minus tax expense.
2. Balance Sheet
- Accounts Receivable: Money owed to the company by customers for goods or services sold on credit.
- Allowance for Doubtful Accounts (ADA): An estimate of the amount of accounts receivable