Concept Introduction:
Revenue and Capital Expenditure:
Expenses are categorized in two types for the purpose of recording, Revenue expenses and Capital Expenses. Revenue expenses are day to day operating expenses, whereas the capital expenses are the expenses incurred in acquisition and improvement of assets. The expenses which are incurred in acquisition and improvement of assets are capitalized to the cost of the assets.
Requirement-a:
To Calculate:
The Operating income that should have been reported for the current year
Concept Introduction:
Revenue and Capital Expenditure:
Expenses are categorized in two types for the purpose of recording, Revenue expenses and Capital Expenses. Revenue expenses are day to day operating expenses, whereas the capital expenses are the expenses incurred in acquisition and improvement of assets. The expenses which are incurred in acquisition and improvement of assets are capitalized to the cost of the assets.
Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Requirement-b:
To Calculate:
The ROI using the incorrect and correct net operating income
Concept Introduction:
Revenue and Capital Expenditure:
Expenses are categorized in two types for the purpose of recording, Revenue expenses and Capital Expenses. Revenue expenses are day to day operating expenses, whereas the capital expenses are the expenses incurred in acquisition and improvement of assets. The expenses which are incurred in acquisition and improvement of assets are capitalized to the cost of the assets.
Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Requirement-c:
To Indicate:
The effect of error in future years ROI if not corrected
Trending nowThis is a popular solution!
Chapter 6 Solutions
Principles of Financial Accounting (Elon University)
- The beginning inventory at Smith Co. and data on purchases and sales for a three-month period ending June 30 are... Date Transaction Numberof Units Per Unit Total Apr. 3 Inventory 48 $450 $21,600 8 Purchase 96 540 51,840 11 Sale 64 1,500 96,000 30 Sale 40 1,500 60,000 May 8 Purchase 80 600 48,000 10 Sale 48 1,500 72,000 19 Sale 24 1,500 36,000 28 Purchase 80 660 52,800 June 5 Sale 48 1,575 75,600 16 Sale 64 1,575 100,800 21 Purchase 144 720 103,680 28 Sale 72 1,575 113,400 Record inventory, purchases, cost of merchandise sold data in perpetual invetory record similar to the one illutrated in exhibit 3 using FIFO. Under FIFO if units at two different costs eneter the units with the lower unit cost first in the cost of goods sold unit cost column and in the inventory unit cost column. There is only a total of 4 blanks for Purchases (each 4 of qty, Unit, total) There is only 9 blanks for costs of goods sold (each 9 of qty, Unit, total) There is only 16…arrow_forwardI want to this question answer general accountingarrow_forwardGiven the solution and accounting questionarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education