View
- Term
- Definition
- Both Sides
Study
- All (35)
Shortcut Show
Next
Prev
Flip
RETL 261: Exam 2
Income Summary
|
a temporary account only used for the closing process
|
Revenue accounts
|
begin each accounting period with zero balances
|
Current Ratio Calculation
|
Current Assets / Current Liabilties
|
Work Sheet
|
a tool to help organize information needed in adjusting the accounts and preparing the financial statements.
Not a required report
|
Closing Entries
|
All temporary accounts are closed but not the permanent accounts.
|
Permanent Accounts
|
Report on activities related to one or more future acct periods
Carry ending balance into next period
Assets, liabilities, and equity accounts are not closed; these accounts are called
|
A wholesaler
|
an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.
|
Gross Profit Equation
|
Net Sales - COGS
|
Operation Expense Equation
|
Gross Profit - Net Income
|
Another word for Gross profit
|
gross margin
|
Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.
|
TRUE
|
Purchase allowances
|
refer to merchandise a buyer acquires but then returns to the seller.
|
Purchase Discounts Equation
|
Discount %, #of days discount rate is available, net, credit period
|
Seller
|
responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.
|
Merchandise purchased with transportation costs, returns, and with discount Equation
|
((Merch. Cost - Cost of Returns) x Discount Decimal)) + Transportation Costs =
|
A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:
|
$4,000.50
|
Perpetual Inventory Journal Entry Equation
|
Accounts Payable x Discount Decimal =
|
A company has net sales and cost of goods sold of $825,000 and $547,000, respectively. Its net income is $98,500. The company's gross margin and operating expenses are ________ and ____________, respectively.
|
$278,000; $179,500
|
Cost of an Inventory Item
|
includes its invoice cost minus any discount, and plus any added or incidental costs necessary to put it in a place and condition for sale.
|
Goods on consignment
|
goods shipped by their owner, called the consignee, to another party called the consignor.
|
Incidental costs
|
import duties, freight, storage, and insurance.
often added to the costs of inventory
|
Consistency Concept
|
a company uses the same accounting methods period after period, so that financial statements are comparable across periods.
|
According to the lower of cost or market, the inventory should be written down how
|
...
|
Net realizable value (NRV)
|
the expected selling price in the ordinary course of business minus the cost necessary for completion and disposal.
|
The 'days' sales in inventory' ratio
|
ending inventory / cost of goods sold x 365
|
Damaged and obsolete goods that can be sold-
|
Are included in inventory at their net realizable value
|
LIFO
|
assigns the most recent costs to cost of goods sold, and does a better job of matching current costs with revenues on the income statement.
|
Tops had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory turnover of $1,965 million. Its days' sales in inventory equals:
|
80.9.days.
|
Merchandise inventory
|
All goods owned by a company and held for sale
|
Goods in transit are included in a purchaser's inventory:
|
When the purchaser is responsible for paying freight charges
|
Temporary Accounts
|
include all income statement accts, the withdrawals accts, and the income summary report
Accts accumulate data related to one acct period
|
FOB shipping point
|
indicates that the sale occurred at the shipping point
buyer should take responsibility for the cost of transporting the goods
|
FOB destination Point
|
indicates that the sale will occur when it arrives at the destination—at the buyer's receiving dock.
Seller should take responsibility for the cost of transporting the goods
|
consignor
|
is the person sending a shipment to be delivered
|
consignee
|
the entity who is financially responsible (the buyer) for the receipt of a shipment
|