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Year Two Chapter 9. Standard Accounting Practices. Bellwork. You are investigating a possible restaurant to purchase. What would you like to know or be shown to help you make that decision? Take five minutes to discuss with the group at your table.

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year two chapter 9

Year Two Chapter 9

Standard Accounting Practices

bellwork
Bellwork

You are investigating a possible restaurant to purchase. What would you like to know or be shown to help you make that decision?

  • Take five minutes to discuss with the group at your table.
  • Come up with very specific needs. Be ready to report to the class your answers.
9 1 vocabulary
9.1 Vocabulary
  • Accounting
    • A system that helps businesses keep track of all their financial information in an organized way.
  • Transaction
    • When money is exchanged for business reasons; needs to be recorded in accounting records.
  • Loss
    • When a business spends more money to pay its costs than it receives in revenue.
  • Profit
    • The money left when costs have been subtracted from revenue.
what is the cost of sales and how is it figured page 382
What is the cost of sales and how is it figured? (page 382)
  • Cost is the price paid for goods or services when the goods are received or the services are provided.
  • Direct cost is an expense that is the responsibility of a specific department.
  • Indirect costs are expenses that are not easily charged to any one specific department.
think about this
Think about this

If you share an apartment with a roommate, but you only make 10% of the long-distance phone calls, you should pay only 10% of the long-distance phone bill. You benefit from having the long-distance service but your usage is much less than your roommate’s. You should pay your fair share, but it may not be 50%.

follow through
Follow Through

Alexander’s Restaurant began December with $4,765 worth of products in its food inventory, ended the month with $2,690 worth of products in inventory, and had receipts showing a total of $4,950 in purchases. Determine the operation’s cost of sales for December. Bonus question: What is the opening inventory for January?

answer
Answer:
  • $4,765 + $4950 - $2,690 = $7,025
  • Bonus: $2,690
group discussion
Group discussion
  • Define direct and indirect costs.

(pg382-3)

  • How are these costs distributed in a large scale operation?
  • Be prepared to identify your answer.
calculate revenue and costs
Calculate-Revenue and Costs
  • Louie’s Rib Barn started the month with $12,500 worth of food in its food inventory. At the end of the month they purchased $36,800 in food. Louie’s total costs for the entire year were $635,500. In addition to its dining room revenue, they also have delivery and banquet revenues.
figure louie s monthly cost of sales
Figure Louie’s monthly Cost of Sales
  • Starting Inventory-$12,500
  • Ending Inventory-$10,200
  • Food purchases-$36,800
louie s yearly revenue
Louie’s Yearly Revenue

DepartmentRevenuePercentage

Dining room $445,020

Delivery 230,000

Banquet 276,900

Total

Calculate each of the three department’s

Percentage of total revenue ( Divide the total revenue into the department total)

louie s yearly revenue answer
Louie’s Yearly Revenue Answer

DepartmentRevenuePercentage

Dining room $445,020 47%

Delivery 230,000 24%

Banquet 276,900 29%

Total $951,920 100%

did louie s rib barn experience a profit or loss
Did Louie’s Rib Barn experience a profit or loss?
  • Yearly Revenue $951,920
  • Yearly food cost $635,500

What was the profit or loss?

    • $316,420 profit
9 2 vocabulary
9.2 Vocabulary
  • T-account (Double-Entry Account)
    • An accounting method which resembles a capital T that uses debits on the left and credits on the right.

Account Name

Debits

Credits

9 2 vocabulary cont
9.2 Vocabulary, cont.
  • Credit
    • Amount entered on the right side of a double-entry account (T-account)
  • Debit
    • Amount entered on the left side of a double-entry account (T-account)
example
Example:
  • A manager buys an oven for $8,500 cash. The transaction will be recorded as follows:

Cash

Equipment

Debits

Credits

Debits

Credits

$8,500

$8,500

do these t accounts on your own
Do these T-accounts on your own!

Enter the appropriate debits and credits for the following transactions in the T-accounts shown: (see page 391)

a. Purchased supplies worth $1,800 on credit.

b. Paid $800 cash for advertising.

c. Paid $1,800 cash on transaction a.

d. Paid $4,000 for wages.

e. Collected $15,800 in revenue.

f. Purchased a new soda fountain for $1,000 cash, $3,500 credit.

T’s = Cash, Accounts Payable, Wages, Supplies, Revenues, Advertising, Equipment

9 3 vocabulary
9.3 Vocabulary
  • Income Statement
    • Shows a business’s revenue and expenses over a period of time, as well as the resulting profit or loss.
  • Net Income
    • Final profit or loss of the business for a given period of time; found at the bottom of the income statement for that period.
did you know
Did you know?
  • When someone wants to know the bottom line, what they’re referring to is net income, which is found at the bottom of the income statement. Net income gives a quick snapshot of how well or how poorly a business is performing.
the chef s delight
The Chef’s Delight

Quarterly Income Statement for The Chef’s Delight

TOTAL REVENUE $57,000

EXPENSES

Cost of Goods sold $29,000

Supplies expense 1,250

Wages 6,500

Advertising 400

TOTAL EXPENSES $

NET INCOME $

chef s delight income statement answer key
Chef’s Delight Income Statement Answer Key

Chef’s Delight

TOTAL REVENUE $57,000

EXPENSES

Cost of Goods sold $29,000

Supplies expense 1,250

Wages 6,500

Advertising 400

TOTAL EXPENSES $ 37,150

NET INCOME $ 19,850

9 4 vocabulary
9.4 Vocabulary
  • Asset
    • An item of value that is owned by a business.
      • Paper asset - cash and credit extended to customers.
      • Physical assets - things such as buildings, equipment, furniture, accessories, and supplies.
      • Current assets - those that can be converted to cash within one year.
      • Fixed assets or capital items - items that have a life expectancy of at least three years, such as land, buildings, furniture, fixtures, and kitchen equipment.
balance sheet
BALANCE SHEET
  • A basic financial report that provides information about what a business owns and owes at a particular date.

(See page 400)

Assets = Liabilities + Owner’s equity

9 4 vocabulary cont
9.4 Vocabulary, cont.
  • Depreciation
    • Method of recording an asset’s gradual decrease in value over its lifetime.
  • Liabilities
    • Debts owed by a business.
    • Current liabilities
      • Must be paid in one year. (Accounts payables, Food supplies, advertising, etc)
    • Long-term liabilities
      • Must be paid beyond one year after the balance sheet date. (Mortgage or rent, bonds, van loan, etc.)
on your paper identify the following asset a or liability l short term st or long term lt or n a
On your paper, identify the following: Asset(A) or Liability(L)Short-term(ST) or Long-term(LT) or N/A

A or L ST or LT

  • Accounts payable ___ ___
  • Stocks in a company ___ ___
  • Tables and chairs ___ ___
  • Food Inventory Items___ ___
  • Tableclothes ___ ___
  • Unpaid salaries ___ ___
  • Profits ___ ___
  • Cash on hand ___ ___
owner s equity
Owner’s Equity
  • Owner’s equity = Total assets – Total

liabilities

  • It tells the worth of the business.
answer for bellwork
ANSWER FOR BELLWORK:
  • You would want to see the owner’s equity.
  • You would want to see the income statement.
  • You would want to see the balance sheet.