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to a company that will resell the goods) and is typically a percentage of the selling prices. The seller must file a sales tax report and remit the sales taxes it had collected. Basically, the company making the sale...

(or manufactured) are the first costs to be removed from inventory and matched with the sales revenues reported on the income statement. This means that the oldest costs remain in inventory. LIFO became popular due to...

contra revenue accounts to inform management of their magnitude. Therefore, gross sales can also be defined as the company’s sales revenues before deducting the sales returns, sales allowances, and sales discounts....

of the van. The total cost of the van will then be charged to depreciation expense over the van’s Debit Cash for $107,000 Credit Sales (or Sales Revenues) for $100,000 Credit Sales Taxes Payable for $7,000 When the...

What is the contribution margin ratio? Author: Harold Averkamp, CPA, MBA Definition of Contribution Margin Ratio The contribution margin ratio is the percentage of sales revenues, service revenues, or selling price...

Our Explanation of Financial Statements provides you with the highlights of each of the five external financial statements issued by U.S. corporations. Our insights will give you a good understanding of what the...

Cash and has an obligation to provide the goods or services to the customer or to return the money. Hence, the current liability account Customer Deposits is credited. When the company earns the deposit amount, the...

Revenues to an income statement revenue account (such as Sales Revenues, Service Revenues, Fees Earned, etc). Example of Deferred Revenue To illustrate deferred revenue, let’s assume that a company designs websites...

. After Jones Corporation delivers the goods or services, it will debit Deferred Revenue for $10,000 and will credit Sales Revenues or Service Revenues for $10,000. Join PRO to Track Progress Mark the Question as Read...

to be profitable, it must have sufficient sales revenues (quantity and prices) to cover both the product costs of the units sold and the other expenses of the accounting period. Example of Product Cost per Unit The...

the nonmanufacturing overhead costs are not allocated to the products, the company must have its selling prices and sales revenues sufficiently large to cover both the product costs and the period expenses to have a...

Our Explanation of Bookkeeping provides you with a rich understanding of the recording of transactions. It then discusses the additional steps necessary for preparing accurate financial statements. This is great for...

Our Explanation of Break-even Point illustrates how to determine the number of units or sales dollars that will result in zero net income. The techniques rely on a product's contribution margin or contribution margin...

Our Explanation of Accounting Principles provides you with clear and concise descriptions of the basic underlying guidelines of accounting. You will see how the accounting principles affect the balance sheet and income...

Fees earned from providing services and the amounts of merchandise sold. Under the accrual basis of accounting, revenues are recorded at the time of delivering the service or the merchandise, even if cash is not received...

. Smith, Capital Revenue accounts and gain accounts such as Sales Revenues, Service Revenues, Interest Revenues, Gain on Disposal of Equipment, Gain from Lawsuit, and many others Contra-asset accounts including Allowance...

, will be deferred to the current asset account Inventory. When goods are sold, the retailer moves the cost of those goods from Inventory to the income statement as the Cost of Goods Sold, which is an expense that is...

: Operating revenues (net sales, service revenues, etc.) and operating expenses (cost of sales, SG&A expenses) appear first The subtotal Gross profit is the result of subtracting the Cost of sales from the Net sales...

Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...

Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...

's cost of goods sold will increase in total as sales increase. Cost of goods sold will decrease in total when sales decrease. 7. Contribution margin is defined as sales (or revenues) minus variable expenses. True...

Our Explanation of Break-even Point illustrates how to determine the number of units or sales dollars that will result in zero net income. The techniques rely on a product's contribution margin or contribution margin...

Why are sales a credit? Author: Harold Averkamp, CPA, MBA Definition of Sales In accounting, sales are revenues earned when a company transfers ownership of its goods to its customers. Under the accrual basis or method...

with sales revenues? FIFO Wrong. Under FIFO the first or oldest costs are the first costs being matched with revenues of the current period. LIFO Right! The most recent purchases are the last costs in and those costs...

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