ACCT 2001 : ACCT Test Two Highlights
Document Summary
Know how to calculate gross profit and net income. *know the difference between fob shipping point and fob destination. In fob shipping point the buyer pays the shipping (freight costs: fob destination- seller pays shipping- responsible to bringing the product to the buyer. = gross profit/net sales: measures the margin by which selling price exceeds cost of goods sold. = net income/ net sales: measures the extent by which selling price covers all expenses (including cost of goods sold) Seller: cost of goods sold, purchase returns and allowances, purchase discount. Fifo= first in first out: earliest goods purchased are first to be sold, top to bottom. Lifo=last in first out latest goods purchased are first to be sold: bottom to top. Factors that contribute to fraudulent activity: opportunity, financial pressure, rationalization. Methods and measures adopted to: safeguard assets, enhance accuracy and reliability of accounting records, increase efficiency of operations, ensure compliance with laws and regulations.