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Accounting Equations
| Term | Definition |
|---|---|
| Asset= | Liabilities + Owners Equity |
| Gross Profit = | Sales - Cost of goods sold |
| Net Profit = | Revenue - Expenses |
| Inventory Turnover Rate = | Cost of Goods Sold/Average Inventory |
| Receivable Turnover Rate = | Net Sales/Average Accounts Receivable |
| Net Sales = | Total Sales – (Sales Returns + Allowances + Discounts) |
| Current Ratio = | Current Asset/Current Liabilities |
| Working Capital = | Current Assets - Current Liabilities |
| Estimation of the amount of ending inventory(Gross Profit Method) = | Cost of goods available for sale - cost of goods sold |
| Cost of goods sold (COGS)= | Net sales cost ratio (or 100- gross profit rate) |
| Gross Profit Rate = | (Revenue - COGS/Revenue)x100 |
| Earnings Per Share = | Net income/ Common shares outstanding |
| Earnings Per Share (with preferred stock) = | Net income - Preferred dividends/ Common shares outstanding |
| Amortization expense = | Cost of Asset/Estimated Useful Life |
| Depreciation Expense = | Cost of Asset Accelerated Depreciation Rate |
| New Book Value = | Book Value -Depreciation Expense |
| Gain/Loss = | Cost Paid - (Cost - Accum Dep) |
| Return on Equity = | Net income/AverageStockholderEquity |
| Simple Interest = | Principle x Rate x Time |
| Trend Percentage- Change In Amount = | Current Year Amount - Base Year Amount |
| Trend Percentage- Percentage Change= | (Current Year Amount - Base Year Amount/ Base Year Amount) x 100 |
| Trend Percentage- Quick Ratio = | Cash + Marketable Securities + Accounts Receivables/Current Liabilities |
| Net income as a percentage of sales = | Net income/net sales |
| Return on Assets = | Operating Income/Average Total Assets |
| Return on Equity = | Net Income/ Average Total Stockholder’s Equity |
| Debt Ratio = | Total Liabilities/Total Assets |
| Prime Cost = | Direct Materials + Direct Labor |
| Conversion Cost = | Direct Labor + Manufacturing Overhead |
| Unit Conversion Cost = | (Direct Labor + Variable Overhead + Fixed Overhead)/Units |
| Unit Variable Product Cost = | DirectMaterials + DirectLabor + Variable Manufacturing Overhead |
| Direct Materials Used= | (Beginning Inventory + Purchases) - Ending Inventory |
| Cost of Finished Good Available for Sale = | Beginning Finished Goods Inventory + Cost of Finished Goods Manufactured during the Year |
| Operating Income = | Net Sales - Cost of goods sold - operating expenses |
| Applied Overhead Per Job = | (Cost of Job/Workers make per hour) * applied overhead |
| Overapplied or Underapplied Overhead = | Applied Overhead - Actual Overhead |
| Overapplied or Underapplied Overhead Entry- | - Negative: Debit Manufacturing Overhead, Credit COGS - Positive: Credit Manufacturing Overhead, Debit COGS |
| Statement of Cost of Goods Sold- | Cost of Goods Manufactured Add: Beginning Finished Goods Cost of Goods Available for Sale Less: Ending Finished Goods Cost of Goods Sold |
| Statement of Cost Of Goods Manufactured Prt 1- | Direct Materials Beginning Inventory Add: Purchases Materials Available Less: Ending inventory |
| Statement of Cost Of Goods Manufactured Prt 2- | Direct Materials used in production (ABCD) Direct Labor Manufacturing (Factory) Overhead Total Manufacturing Costs Added (DM + DL + MO) Add: Beginning Work in Process Less: Ending work in process Cost of Goods Manufactured |
| Income Statement | Sales Cost of Goods Sold Gross Margin Less: Operating Expenses A. Selling expenses B. Administrative expenses Operative Income |
Created by:
Mogbo
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