Chapter 6, Problem 6.1BYP

(a)

To determine

Financial statements: Financial statements refer to those statements, which are prepared by the Company at the end of the accounting period in the particular formats which are prescribed in accounting to show its financial position.

The four financial statements are:

• Cash flow statement
• Income statement
• Retained earnings statement
• Balance sheet

Balance sheet: The balance sheet of a Company is the one of the most important financial statements because it shows the financial position of the Company.

Main components of balance sheet are assets, liabilities and stockholder’s equity are as expressed as in the following equation:

$\text{Assets }=\text{ Liabilities}+\text{Stockholders' equity}$

Inventory cost flow: It refers to the flow (movement) of inventory when it is purchased or sell by the business organization.

The various inventory cost flow methods are:

• First-in, first-out (FIFO)
• Last in, first-out (LIFO)
• Average-cost

To determine: The amount of inventories reported in balance sheet at September 29, 2012 and September 28, 2013.

(b)

To determine

The amount of change in inventories and its percentage between 2012 and 2013. And also inventory percentage to current assets at September 28, 2013.

(c)

To determine

The cost flow method used by A Company for its inventory valuation.

(d)

To determine

The cost of goods sold in 2013, 2012, and 2011 years. And also the percentage of cost of goods sold to net sales in 2013.