1. Accounting for Various Types of Businesses

2. Service Businesses
Very simple accounting. Only have the service itself to keep track of – it’s intangible.

3. Retail/ Product-Sales Business
Items often purchased on credit and paid for at a later date.
Inventory control is crucial: match quantity ordered to quantity received and how much you are charged.
A fiscal year is a 12 month operating period. Inventory is usually replenished at the start of every fiscal year.

4. Cost of Goods Sold: value of items sold throughout the year
Beginning Inventory
Inventory Purchased
Cost of all Goods Available for Sale
Ending Inventory
Cost of Goods sold $ $
40 000 $

5. Gross Profit: Money left over after deducting cost of goods sold from revenue, but before deducting expenses that helped generate revenue.
Sales Revenue
Cost of Goods Sold
Gross Profit $ $

6. Net Income is what a business owner declares for income tax purposes.
Net Profit/ Net Income: Amount resulting from deduction of expenses from gross profit.
Net Income is what a business owner declares for income tax purposes.
Wholesalers and importers use this same method.
Gross Profit
Expenses $ $

7. Manufacturing Businesses
Accounting is more complex.
4 Factors to consider:
Raw Materials ( unprocessed, semi or fully-processed);
Goods in process (goods that are partially finished);
Direct labour (labour involved in the manufacturing process);
Finished goods (Cost of finished product)
Factory overhead includes expenses in operating the production facility
Cost of Finished Goods = Raw Materials + Direct labour + Factory Overhead

8. Class Work
P.184 # 1a,b,c; 2c ( explain how, don’t worry about $)