Accounting Concepts and Calculations: A Comprehensive Guide

Classified in Latin

Written at on English with a size of 2.49 KB.

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 that will not be collected.
  • Net Accounts Receivable: Accounts receivable minus ADA.

3. Inventory Management

  • FIFO (First-In, First-Out): Assumes that the oldest inventory is sold first.
  • AV W (Average Weighted): Calculates the average cost of goods sold based on the cost of all inventory purchased during the period.
  • Ending Inventory: The value of the inventory on hand at the end of the period.

4. Depreciation

  • Straight-Line Depreciation: Allocates the cost of an asset evenly over its useful life.
  • Accumulated Depreciation: The total amount of depreciation that has been recorded for an asset.
  • Book Value: The cost of an asset minus accumulated depreciation.
  • Depreciation Expense: The amount of depreciation recorded for an asset during a period.

5. Double-Declining Balance Method (DDM)

  • Calculates depreciation based on a fixed percentage of the book value of an asset.
  • Results in higher depreciation expense in the early years of an asset's life.

6. Units of Production Method

  • Calculates depreciation based on the number of units produced by an asset.
  • Results in more accurate depreciation expense allocation for assets that are used unevenly over their useful life.

Entradas relacionadas: