Inventory
Which inventory accounting method is the only one that can be used for food / perishables?
FIFO
What is the only business entity that has dual taxation?
C Corporation
Name the three different types of financial statements
- Cash flow statement
- Income statement
- Balance sheet
When is the weighted average method typically used?
Which inventory method produces low taxes, low income, and high COGS?
When you can't measure the difference between shipments.
LIFO
Name two advantages of a sole proprietorship over a partnership.
- Profits not shared
- Less tension or disagreements
- Less liability issues
- More control
What is the accounting equation?
Assets = liabilities + equity
What exactly is EOQ?
Name one limitation of EOQ.
EOQ measures the order quantity that saves the most money without running out of supplies.
Limitations: assumes unlimited storage space
Assumes constant annual demand
Doesn't account for discounts or promotions
Explain the differences between an LLC and a corporation.
Corporation can sell stock
Corporation can obtain capital easier
Corporation has more legal restrictions
C Corp is taxed twice.
Explain how a balance sheet is different than an income statement
Income statement tracks profits /losses (revenue / expenses)
Balance sheet balances out assets with equity and liabilities
Suppose a furniture company has an annual demand of 2000 couches, an order cost of $40, and a holding cost of $20. Find the EOQ.
EOQ = 89.44
Explain at least 3 requirements for a corporation to exist
Board of directors
Articles of incorporation
Corporate bylaws
Shareholders
What is the journal entry for buying $2000 worth of furniture on credit?
Debit supplies (or furniture), credit accounts payable
On 1/4, Megan bought 12 new mattresses from her supplier at $1500 each, then on 1/27 she bought 10 of the same ones at $1700 each, and finally on 2/3 she bought 14 more at $1800 each. After selling in January and February, Megan was left with 4 mattresses in Ending Inventory. Find her COGS, cost of EI, and GM using FIFO, LIFO, and Weighted Average accounting methods. Megan sells this type of mattress at $2200.
X EI COGS Revenue GM
FIFO 7200 53000 70400 17400
LIFO 6000 54200 70400 16200
WA 6688 53511 70400 16889
What are three (all or nothing) restrictions for an S corp to exist (as opposed to a C corp)?
- All US citizens
-100 shareholders or less
- one class of stock only sold
If you are putting $10,000 in capital into your business, what is the journal entry?
10,000 cash debited (left)
10,000 capital credited (right)