Question

1)what is accounting

2) What is difference between financial accounting and cost accounting

3) What are the parts of financial statement

4) what is the difference between income statement and balance sheet

5 ) sales 100,000 cost of goods sold 50,000 operating exp 10,000 ( compute net income for the company

6) sales return 10,000 sales discount 25,000 net sales 200,000 ( compute the gross sales )

7 ) beginning inventory 10,000 total cost of purchases 200,000 ending inventory 50,000 ( compute cost of goods sold )

8) cost of goods sold 50,000 ending inventory 10,000 total cost purchases 45,000 ( compute cost of beginning inventory )

9) net profit 20,000 operating exp 10,000 cost of goods sold 50,000 ( compute total sales )

10) cost of goods sold 50,000 operating exp 30,000 net profit 20,000 ( compute total sales )

11) cost of raw material used 20,000 direct labor 10,000 Factory over head 20,000 ( compute manufacturing cost - prime cost - conversion cost )

12 ) Manufacturing cost 100,000 cost of work in process beginning 20,000 and cost of work in process ending 30,000 ( cost of goods manufactured )

13 ) what is the difference between cost of goods manufactured and cost of goods sold

14) finished goods beginning 10,000 cost of goods manufactured 50,000 cost of finished goods ending 30,000 ( cost of goods sold )

15 ) cost of goods sold 100,000 cost of goods manufactured 70,000 cost of finished goods ending 20,000 ( cost of finished goods beginning )

Answer 1

1) Accounting

Accounting is the art of recording, classifying, summarizing, analyzing and interpreting the financial data used for the informed decision making by the users of the accounts.

It is through accounting every transaction entered by the entity is recorded and used for decision making by the stakeholders. Unless we do accounting of the activities undertaken by the company, it is not possible to trace the performance and analyze the financial position or requirements of the company.

2) Difference between financial accounting and cost accounting

Financial accounting:

It covers the preparation and interpretation of financial statements and communicating to its users. It is of historical nature as it records the transactions that are already occurred. The two main aspects of financial accounting are

1. Preparation of Profit and Loss account –Determines net income for the accounting period

2. Preparation of Balance Sheet – Determines the Financial Position as on the given date

Cost accounting:

It is the process of accounting for costs, recording of incomes and expenses or the bases on which they are to be calculated. The main aspect will be preparation of periodical statements of reports and incomes for ascertaining and controlling costs.

3) What are the parts of financial statements

1. Statement of Comprehensive Income (Income statement)

2. Statement of Financial Position (Balance sheet)

3. Statement of Cash flows

4) Income statement: It depicts the net income or loss for the accounting period. It shows the performance of the entity during the accounting period

Balance Sheet: It depicts the financial position of the entity as on the given date. It shows the financial strength of the entity, whether the entity is financially capable to continue the business or not.

5) Net Income for the company

Particulars	Amount
Sales	100,000
Less: Cost of goods sold	(50,000)
Less: Operating expenses	(10,000)
Net income	40,000

6) Gross sales

Particulars	Amount
Net sales	200,000
Add: Sales return	10,000
Add: Sales discount	25,000
Gross sales	235,000

7) Cost of goods sold

Particulars	Amount
Beginning inventory	10,000
Add: Purchases	200,000
Less: Closing inventory	(50,000)
Cost of goods sold	160,000

8) Cost of beginning inventory

Particulars	Amount
Cost of goods sold	50,000
Add: closing inventory	10,000
Less: Purchases	(45,000)
Cost of beginning inventory	15,000

9) Total sales

Particulars	Amount
Net profit	20,000
Add: Operating exp	10,000
Add: cost of goods sold	50,000
Total sales	80,000

10) Total sales

Particulars	Amount
Net profit	20,000
Add: Operating exp	30,000
Add: cost of goods sold	50,000
Total sales	100,000

11)

Prime cost

Particulars	Amount
Cost of materials	20,000
Direct labor	10,000
Prime cost	30,000

Conversion cost

Particulars	Amount
Direct labor	10,000
Factory overhead	20,000
Conversion cost	30,000

Manufacturing cost

Particulars	Amount
Cost of materials	20,000
Direct labor	10,000
Factory overhead	20,000
Manufacturing cost	50,000

12) Cost of goods manufactured

Particulars	Amount
Work in process beginning	20,000
Add: Manufacturing cost	100,000
Less: Closing worki in progress	(30,000)
Cost of goods manufactured	90,000

13)

Cost of goods manufactured:

It is the cost incurred during the period for the manufacture of the goods that are processed during the period. It may include cost pertaining to, opening work in progress –remaining cost incurred in current period, goods introduced in the current period –cost incurred for these goods and closing work in the progress –cost incurred in the current period. It is the production cost for the period. Need not necessary that the goods produced are completely sold.

Cost of goods sold:

It is the cost pertaining to the goods sold during the period. It may include, opening work in progress –goods that are finished and sold, goods introduced in the current period and sold. It is the production cost of goods sold.

14) Cost of goods sold:

Particulars	Amount
Finished goods beginning	10,000
Add: cost of goods manufactured	50,000
Less: Cost of finished goods ending	(30,000)
Cost of goods sold	30,000

15) Cost of finished goods beginning:

Particulars	Amount
cost of goods sold	100,000
Add: Cost of finished goods ending	20,000
Less: cost of goods manufactured	(70,000)
Cost of Finished goods beginning	50,000