College Accounting (Book Only): A ...
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College Accounting (Book Only): A ...
Costco is the largest chain of membership warehouse clubs in the world, based on sales volume, and it is the fifth largest general retailer in the United States. Costco focuses on selling products at low prices, often at a very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Costco became the first company to grow from zero to $3 billion in sales in less than six years. In a recent fiscal year, Costco’s sales totaled $116 billion, a 2 percent increase from 2015, and its net income reached $2.35 billion, an 1 percent decrease from 2015. This information, and much more, can be derived from the financial statements that merchandising firms such as Costco prepare on a regular basis to provide shareholders and other interested parties information about the company’s activities and financial performance.
- 1. What type of information would a classified income statement provide to shareholders and other interested parties?
- 2. What type of information would a classified balance sheet provide to shareholders and other interested parties? Why would this information be important for calculating the working capital and the current ratio, for example?
1.
Indicate the information provided by classified income statement to the shareholders and other parties.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Information provided by classified income statement:
- A classified income statement represents revenues and expenses with several subtotals, to report the income from principal operations, and separate the other expenses and revenues which affect net income.
- Right from net sales and cost of goods sold, the revenue and expenses are reported in detail, in classified income statement...
2.
Indicate the information provided by classified income statement to the shareholders and other parties, and explain the way in which the classified balance sheet would help in computing the working capital and current ratio.
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