FIFO- Perpetual inventory System: FIFO (First in first out) method assumes the flow of inventory in the same order of its purchase. In other words, the oldest purchase is assumed to be sold first in order of purchases made. The FIFO method can be applied using perpetual or periodic method. In the perpetual inventory method, the inventory balance is updated after each inventory transaction. Multiple Step income Statement: This is the format of income statement that find the net operating income by calculating gross profit as a difference of Sales revenue and Cost of goods sold and then net operating profits are calculated after subtracting the total operating expenses from gross profits. Statement of owner’s equity: This statement shows the net balance in the capital after adjusting the withdrawals and net income earned during the year. Classified balance sheet: This format of balance sheet classifies the accounts in separate heading like current assets, long term assets, properly plant and equipments, Current liabilities, long term liabilities and Equity. To prepare: Multiple Step income Statement, Statement of owner’s equity and Classified balance sheet
FIFO- Perpetual inventory System: FIFO (First in first out) method assumes the flow of inventory in the same order of its purchase. In other words, the oldest purchase is assumed to be sold first in order of purchases made. The FIFO method can be applied using perpetual or periodic method. In the perpetual inventory method, the inventory balance is updated after each inventory transaction. Multiple Step income Statement: This is the format of income statement that find the net operating income by calculating gross profit as a difference of Sales revenue and Cost of goods sold and then net operating profits are calculated after subtracting the total operating expenses from gross profits. Statement of owner’s equity: This statement shows the net balance in the capital after adjusting the withdrawals and net income earned during the year. Classified balance sheet: This format of balance sheet classifies the accounts in separate heading like current assets, long term assets, properly plant and equipments, Current liabilities, long term liabilities and Equity. To prepare: Multiple Step income Statement, Statement of owner’s equity and Classified balance sheet
Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video
Chapter 6, Problem 8CP
To determine
Concept Introduction:
FIFO- Perpetual inventory System: FIFO (First in first out) method assumes the flow of inventory in the same order of its purchase. In other words, the oldest purchase is assumed to be sold first in order of purchases made. The FIFO method can be applied using perpetual or periodic method. In the perpetual inventory method, the inventory balance is updated after each inventory transaction.
Multiple Step income Statement: This is the format of income statement that find the net operating income by calculating gross profit as a difference of Sales revenue and Cost of goods sold and then net operating profits are calculated after subtracting the total operating expenses from gross profits.
Statement of owner’s equity: This statement shows the net balance in the capital after adjusting the withdrawals and net income earned during the year.
Classified balance sheet: This format of balance sheet classifies the accounts in separate heading like current assets, long term assets, properly plant and equipments, Current liabilities, long term liabilities and Equity.
To prepare: Multiple Step income Statement, Statement of owner’s equity and Classified balance sheet