Accounting: Revenue and Goods Sold
Case 1
Answer 1: Company A is small and has a low profile because of low volume of sales and no advertisement expenses. This shows Proprietary Business.
Company B is a large and have a high profile because sales value is high and it incurs heavy cost of advertisement expenses.
Answer 2: This is possible because the sales of Company B are 3.4 times higher than the sales of Company A, so even the large expenditure doesn’t affect the Net Income.
Answer 3: A: = $211686/$415072*100 = 50.99% or Say 51% B: If Cost of Goods Sold of Company B is 58%.
Than COGS = $240742 and Total Operating Expenses are $149025.
Hence $415072-$240742-$149025 = $25305.
Therefore Net Income will be lower by ($54361-$25305) = $29056.
Case 2
Answer 1: Cost of Goods Sold (50% of $110000) = $55000.
Answer 2: The most likely reason for the high figure for cost of goods sold is that purchases are made in excess. It means that if the purchases are made at $54500 than the level of cost of goods sold may be achieved.
Answer 3:
Sales
Cost of goods Sold
Opening Inventory
Purchases
Less Closing Stock
Gross Profit
Operating Expenses
Net Income
$36500
$54500
$36000
$110000
$55000
$55000
$29000
$26000
Answer 4: The Owner can prevent irregularities by the following ways:-
Keep checking the Ratios at small interval of time. Taking Bank Reconciliation Statement. Matching the Revenue with Expenses. Take Consistency in method of recording the transaction.
Case 3
Answer 1: Yes Lequita Adkins is a clever business person because Firstly she took a grace period of 90 days from 30 days, thereafter on final payment she also took 2% cash discount if the payment is made at once.
Answer 2: Yes Lequita’s policy an ethical one because business ethics says to reduce and minimize the cost, So that profit of the business may be increased.
Answer 3: $200,000*2% = $4,000. i.e. Four Thousand Dollars only.
Answer 4: Yes Lequita is correct when
Answer 1: Company A is small and has a low profile because of low volume of sales and no advertisement expenses. This shows Proprietary Business.
Company B is a large and have a high profile because sales value is high and it incurs heavy cost of advertisement expenses.
Answer 2: This is possible because the sales of Company B are 3.4 times higher than the sales of Company A, so even the large expenditure doesn’t affect the Net Income.
Answer 3: A: = $211686/$415072*100 = 50.99% or Say 51% B: If Cost of Goods Sold of Company B is 58%.
Than COGS = $240742 and Total Operating Expenses are $149025.
Hence $415072-$240742-$149025 = $25305.
Therefore Net Income will be lower by ($54361-$25305) = $29056.
Case 2
Answer 1: Cost of Goods Sold (50% of $110000) = $55000.
Answer 2: The most likely reason for the high figure for cost of goods sold is that purchases are made in excess. It means that if the purchases are made at $54500 than the level of cost of goods sold may be achieved.
Answer 3:
Sales
Cost of goods Sold
Opening Inventory
Purchases
Less Closing Stock
Gross Profit
Operating Expenses
Net Income
$36500
$54500
$36000
$110000
$55000
$55000
$29000
$26000
Answer 4: The Owner can prevent irregularities by the following ways:-
Keep checking the Ratios at small interval of time. Taking Bank Reconciliation Statement. Matching the Revenue with Expenses. Take Consistency in method of recording the transaction.
Case 3
Answer 1: Yes Lequita Adkins is a clever business person because Firstly she took a grace period of 90 days from 30 days, thereafter on final payment she also took 2% cash discount if the payment is made at once.
Answer 2: Yes Lequita’s policy an ethical one because business ethics says to reduce and minimize the cost, So that profit of the business may be increased.
Answer 3: $200,000*2% = $4,000. i.e. Four Thousand Dollars only.
Answer 4: Yes Lequita is correct when