Lecture Survey of accounting - Chapter 5: Accounting for receivables and inventory cost flow

Accounting for Receivables and Inventory Cost Flow Chapter 05 McGraw­Hill/Irwin Copyright © 2012 by The McGraw­Hill Companies, Inc. All rights reserved. 5-2 Learning Objectives 1. Explain how the allowance method of accounting for uncollectible accounts affects financial statements. 2. Determine uncollectible accounts expense using the percent of revenue method. 3. Determine uncollectible accounts expense using the percent of receivables method. 4. Explain how accounting for notes receivable affects financial statements. 5. Explain how accounting for credit card sales affects financial statements. 6. Explain how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements. 5-3 Financial Statements Statement of Cash Flows Income Statement Service Revenue $ 14,000 Uncollectible AcctsExpense (75) Net income $ 13,925 Operating Activities Inflow from Customers $ 12,500 Investing Activities -Financing Activities - Net Change in Cash 12,500 Beginning Cash Balance - Ending Cash Balance $ 12,500 Balance Sheet Assets Cash Accountsreceivable $ 1,500 Less: Allowance (75) Net Realizable Value Total Assets Stockholders` Equity Retained Earnings $ 12,500 1,425 $ 13,925 $ 13,925 5-4 Inventory Cost Flow Methods Specific Identification First­in, First­ Out (FIFO) Four Common Inventory Cost Flow Methods Last­in, First­ Out (LIFO) Weighted Average 5-5 Specific Identification When a company’s inventory consists of many high­priced, low­ turnover goods the record keeping necessary to use specific identification is more practical. ... - tailieumienphi.vn