accounting exam equations

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LIFO COGS - FIFO COGS

(FIFO end inventory-LIFO end inventory) - (FIFO beg, inventory - LIFO beg. inventory)

Average cost method: COGS

(unit x cost) + (unit x cost) / (cost + cost) x units sold

average days to sell inventory

365 / inventory turnover

Weighted average cost per unit

COGAFS / units available

FIFO end purchases

FIFO beg. inventory + purchases - FIFO COGS

FIFO inventory

LIFO Inventory + LIFO reserve

LIFO end purchases

LIFO beg. inventory + purchases - LIFO COGS

LIFO reserve

LIFO inventory - FIFO inventory

LIFO gross profit FIFO gross profit

Revenue - LIFO COGS Revenue - FIFO COGS

Percent Accounts Receivable method

accounts receivable (% total accounts receivable)

Ending inventory

beg inventory + purchases - COGS

Cash collections

beg. balance + net sales - end balance -write offs

Beg. balance of 2nd year

beg. balance of previous year + prior year accounts receivable

Bad debt expense

change in doubtful accounts year 1 -2

Inventory turnover

cost of goods sold / average inventory

end balance

current year accounts receivable + prior year end balance

Percent of sales Method

determine percentage, multiply by the total credit sales to get bad debt expense

change in LIFO

difference between LIFO and FIFO cost of goods sold

allowance for doubtful accounts

doubtful accounts credit balance + bad debt expense - allowance doubtful accounts

Cost of goods available for sale

ending inventory + cost of goods sold

Accounts Receivable

given previous accounts receivable + value on credit - allowance for doubtful accounts - account receivable during current year

Write offs

new allowance- (beg, balance + bad debt)

accounts receivable turnover ratio

new credit sales / average net accounts receivable

Gross profit

revenue - COGS

Bad debt expense

sales (% sales uncollectible)

Freight on board destination

seller owns and is responsible for goods

Freight on board shipping point

seller owns and is responsible for goods


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