Questions from Financial Accounting

Q: How is gross profit calculated? What is the gross profit ratio

How is gross profit calculated? What is the gross profit ratio? What is it designed to measure?

Q: At the end of the year, Mercy Cosmetics’ balance of Allowance

At the end of the year, Mercy Cosmetics’ balance of Allowance for Uncollectible Accounts is $600 (credit) before adjustment. The balance of Accounts Receivable is $25,000. The company estimates that 1...

Q: Explain how the sale of inventory on account is recorded under a

Explain how the sale of inventory on account is recorded under a periodic system. How does this differ from the recording under a perpetual system?

Q: What are the purposes of the period-end adjustment under the

What are the purposes of the period-end adjustment under the periodic inventory system?

Q: Jeff is the new inventory manager for Alan Company. During the

Jeff is the new inventory manager for Alan Company. During the year-end inventory count, Jeff forgets that the company stores additional inventory in a back room, causing his final ending inventory co...

Q: Refer to the inventory error in Question 23. Explain what effect

Refer to the inventory error in Question 23. Explain what effect Jeff’s error will have on reported amounts at the end of the following year, assuming the mistake is not corrected and no further mista...

Q: What is the difference among raw materials inventory, work-in

What is the difference among raw materials inventory, work-in-process inventory, and finished goods inventory?

Q: Define the cost of goods available for sale. How does it

Define the cost of goods available for sale. How does it relate to cost of goods sold and ending inventory?

Q: For a company like Best Buy, what does the balance of

For a company like Best Buy, what does the balance of Cost of Goods Sold in the income statement represent? What does the balance of Inventory in the balance sheet represent?

Q: What is a multiple-step income statement? What information does

What is a multiple-step income statement? What information does it provide beyond “bottom-line” net income?