Business Finance - Accounting Homework accounting
1. A merchandiser, like Walmart, has one inventory. The company buys products, mostly from China, adds the freight to that cost, and then marks it up by about 30% to sell to me and you. That's called the retail price. A manufacturer has '3' inventories. Name and define them.
4 SENTENCES MINIMUM, THANKS
2. Inventory Turnover is a key statistic: COGS-Cost of Goods Sold-divided by Average Inventory. The number tells you how quickly your inventory is moving/selling. The higher the number, the better. Perishable goods in a supermarket should have an inventory turnover number of over 50: that means that you are replacing your inventory over 50 times/year or 365 days divided by 50 = every 7.3 days...that makes sense for milk, meats, vegetables etc. Contrast that with a new car dealership: their inventory turnover may be only 6 or 61 days before the new car lot is empty (with the 'virus' today, it's probably 3 or 121 days-nobody is buying new cars, which would be a good time to buy!). Tell me why a high inventory turnover is the goal of any business. How would a high number save a company money, and, ultimately, help both sales-Top Line, and profits-Bottom Line.
4 SENTENCES MINIMUM, THANKS
3. Specific Identification, Average Cost, LIFO-Last in, First out-and FIFO-First in, First out, are the '4' ways to compute COGS-Cost of Goods Sold-and the Ending Inventory. Most companies use FIFO, which is what a supermarket must use-sell the milk and perishables that were delivered 3 days ago before you sell the goods that arrived today. Remember that the inventory methods tell you how to compute COGS. Explain why FIFO and LIFO will always be about the same, except during times of inflation, when prices are rising. How does changing from FIFO to LIFO, during rising prices, affect your net income and taxes for that year only?
4 SENTENCES MINIMUM, THANKS
1.1 Two main subsidiary ledgers exist: the A/R-Accounts Receivable-subsidiary ledger, and the A/P-Accounts Payable-subsidiary ledger. Both of these ledgers must balance with their respective 'Control' accounts in the General Ledger, A/R and A/P. Remember, the General Ledger contains all your accounts, like Cash, A/R, Supplies, A/P, Sales, Salary Expense, etc. Describe how you verify that the totals in these subsidiary ledgers are correct.
4 SENTENCES MINIMUM, THANKS
2.2 Identify and explain the four special journals: Sales, Cash Receipts, Cash Payments, and Purchases. List an advantage of using each of these journals rather than using only a general journal.
4 SENTENCES MINIMUM, THANKS