A Company That Uses a Job Order Cost Accounting System

question 159

Essay

A company that uses a job order cost accounting system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

Grasp the concept and components of other comprehensive income.

Understand the flow of information among the key financial statements.

Recognize the implications of holding a controlling interest in another company and the requirement for consolidated financial statements.

Calculate and record unrealized gains and losses for investments classified as trading purposes.

---

Definitions:

Days' Sales

A financial metric that calculates the average time it takes for a company to convert its inventory into sales.

Receivables Ratio

The Receivables Ratio, also known as the Accounts Receivable Turnover Ratio, measures how efficiently a company collects cash from its customers by comparing sales to the average receivables.

Outstanding Accounts

Accounts or invoices that have been billed but not yet paid by customers.

EBIT

Earnings Before Interest and Taxes, a financial metric indicating a company's operating profitability by excluding interest and taxes from earnings.