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(WIP) ACC 350 Exam 1 Study Material

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Pg. 8 Sarah Allison

Pg. 8 Sarah Allison Takash ACC 350, Spring 2018 Exam 1 Study Material How to sort expenses by category: DM, DL & OH Summary: Direct materials (DM), direct labor (DL), and overhead (OH) are categories of expenses. 13. Direct Materials a. Refer to (#4) “Direct materials (DM)” definition b. Acquisition costs for raw materials (RM) in work in process (WIP) or finished goods (FG) 14. Direct Labor a. Refer to (#3) “Direct labor” definition b. Compensation for workers who convert RM into FG 15. Overhead a. Refer to (#5) “Overhead (OH)” definition b. Either non-manufacturing (SG&A, period cost, expense) or manufacturing (MOH, inventoriable cost, asset into COGS)

Pg. 9 Sarah Allison Takash ACC 350, Spring 2018 Exam 1 Study Material How to prepare an Income Statement Summary: An income statement measures the success of a company over a given period of time. It summarizes the transactions that result in net income (i.e. revenue, expense, gain and loss transactions). It can classify income by categories such as by product, customer, operating, or non-operating income. Determinations and predictions can be made about aspects of the company from analyzation of the income statement (e.g. profitability, level of risk, and timing of future cash flows). ● Example simple format of an income statement (below):