Accounting Miscellaneous

Gross profit is equal to Sales – Cost of goods sold.

LIFO inventory costing methods is supposed to issue the most recently purchased goods. LIFO, which stands for last-in-first-out, is an inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year.

Bills payable, Outstanding expenses and Bank Overdraft are the current liabilities.

Assets minus liabilities equal to Capital, it shows that a company’s total amount of assets equals the total amount of liabilities plus owner’s (or stockholders’) equity.

Mr. Z account account will be credited, if business bought goods on credit from Mr. Z.

Cash account with normal balance is shown at the debit side of a trial balance.

Salaries of selling staff would NOT be considered as a component of ‘cost’ of stock. When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged by the brokerage firm, called commission.

Legal work on patent application is not considered as Research & Development costs. Research and development (R&D) expenses are associated with the research and development of a company’s goods or services.

Office equipment account will be credited when a typewriter is sold that has been used in the office.

X draws a bill on Y. X endorsed the bill to Z. Z will be the payee of the bill.