Accounting 212 GVSU Exam 2

Beginning InventoryAdd: PurchasesCost of Goods Available for SalesLess: Ending InventoryCost of Goods Sold

 Often matches the actual physical flow of inventory “Grocery Store Method” – (fresh produce/milk)  Most popular valuation method EI – is assumed to consist of newer more recently purchased goods. COGS – assumed to consist of older earlier purchased goods

A. “Gravel Pit Method”b. Can results in a tax savingsc. EI – assumed to consist of older earlier purchased goods.d. COGS – assumed to consist of newer more recently purchased goods.

The average unit cost of all inventory available for sale is the samea. Used in homogenous units; producing food, beverages, or refineries Cost of Goods Available for Sale = Average unit cost Units Available for Sales Average unit cost * # of goods in EI = $E

Net Income xxx,xxxIncrease in Inventory Subtract (-)Decrease in Inventory Add (+)Increase in Accounts Payable Add (+)Decrease in Accounts Payable Subtract (-)

Act passed in response to a number of corporate scandals (Enron, WorldCom, HealthSouth, etc) that changed the way public corporations handle internal control

A group of key officers and outside members elected by shareholders of the corporation for general oversight of the affairs of the entity

Motivation, Opportunity, Rationalization

The use of ones occupation for ones personal enrichment through the deliberate isuse or misapplication of the employing agencies resources

Sets the tone of the company includes formal policies assignments of responsibilities and organizational structure

o Proper authorizationso Segregation of dutieso Independent verificationo Safeguarding of assets and recordso Independent review and appraisalo Design and use of business document

An investment that is readily convertible to a known amount of cash and has an original maturity of three months or less

Bank reconciliation , petty cash fund

A form used by the accountant to reconcile or resolve any differences between the balance shown on the bank statement for a particular account with the balance shown in the accounting records

1. Prepare a list of the deposits in transit.2. A deposit recorded on the books but no yet reflected on the bank statement. Deposit in Transit: A deposit recorded on the books but no yet reflected on the bank statement.3. Prepare a list of the outstanding checks. Outstanding Check: A check written by a company but not yet presented to the bank for payment.4. Prepare a list of credit memoranda. Credit Memoranda: Additions on a bank statement for such items as interest paid on the account and notes collected by the bank for the customer.5. Prepare a list of debit memoranda. Debit Memoranda: Deductions on a bank statement for items such as NSF checks and various service charges.6. Identify Errors. $1,450 instead of $1,5407. Prepare a bank reconciliatio