Lesson ７

Dear Yuka,
Thank you for your seventh message. My comments follow.
Sincerely,
Prof. Sue Garreis

Dear Professor Garreis,

Thank you for your reply and corrections of my English.

I will answer your last question.

Homework

1. What is the format for an American Income Statement?

　→The format for an American Income Statement is as follows.

First "Revenue" less "Cost of Goods Sold" equals "Gross Margin."

And "Gross Margin" less "Operating Expenses" equals "Net Income(Loss)."

2. Use you words to tell me how to calculate cost of goods sold.

Please do not use any numbers.

　　→To calculate cost of goods sold use "First-In, First-Out (FIFO)" or "Last-In, First-Out (LIFO)."

3. Did Beach Toys use LIFO or FIFO to calculate the cost of goods sold?

　　→Beach Toys uses FIFO to calculate cost of goods sold.

4. Does the purchase price of inventory rise or fall for Beach Toys, Inc?

　　→The purchase price of inventory is rising.

OR The purchase price of inventory rises.

5. Which inventory method(LIFO or FIFO)is better for Beach Toys, Inc to use?

"Better" means "results in lower income tax."

　　→LIFO is better for Beach Toys to use, because the purchase prices are rising.

6. How easy was this lesson for you?

　　→The accounting was about right.

The English was somewhat hard.

Finding and using the linked web pages was somewhat hard.

Vocabulary-Income Statement (Part 1)

Thank you for the vocabulary list.

I'm waiting for your reply.

Sincerely, yours

Yuka

The next lesson is at:

http://www72.homepage.villanova.edu/susan.stiner/cgu/income207.htm.
This is second of two lessons on the Income Statement under US GAAP.