mmw lecture 3

• Profits when the income is greater than the expenses, including cost of goods sold and there is a loss when the expenses is greater than the income.
• -refers to the goods bought to be sold. It is the total of the beginning inventory and purchases.

  AVAILABLE GOODS FOR SALE
• is the available goods for sale less ending inventory.

  COST OF GOODS SOLD
• AVAILABLE GOODS FOR SALE -refers to the goods bought to be sold. It is the total of the beginning inventory and purchases.
• COST OF GOODS SOLD – is the available goods for sale less ending inventory.
• GROSS PROFIT – is the difference between the net sales and the cost of goods sold.
• NET SALES – is gross sales less sales returns and allowances.
• NET PROFIT – is the gross profit less the operating expenses.
• OPERATING EXPENSES - a business incurs to keep it running on a daily basis
• what are the three types of operating expenses

  SELLING EXPENSES, ADMINISTRATIVE EXPENSES, MISCELLANEOUS EXPENSES
• SELLING EXPENSES – transportation, freight handling, advertisement
• ADMINISTRATIVE EXPENSES – salary and wages , rent
• MISCELLANEOUS EXPENSES - costs that don't fit into the usual categories of a company's budget
• INCOME STATEMENT ,also known as PROFIT AND LOSS STATEMENT is a formal report showing how much a business firm has earned or loss from its operation during a given period

  of time.
• SALES – is the income (revenue) earned by a business from selling of goods or the rendering

  of services. This is the major sources of income of a business.
• SALES REFUND – refers to the money refunded for the goods sold and returned by the customers probably due to inferior quality and/or some defect
• SALES ALLOWANCES – is a reduction in the selling price of goods probably for same reason.
• PURCHASES – are goods bought for sale. It includes the invoice price as well as the incidental expenses such as transportation expenses, taxes, duties and storage costs.
• BEGINNING INVENTORY- is the physical count of the stock of goods on hand at the beginning of the period
• inventory of the goods left unsold at the end of a given period is called

  ENDING INVENTORY.