Chapter 4 & 5
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| merchandise | show 🗑
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| show | entity that earns income by buying and selling merchandise
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| wholesaler | show 🗑
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| retailer | show 🗑
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| show | equals revenues from selling merchandise minus both the cost of merchandise sold and other expenses
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| show | revenues from selling merchandise
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| show | cost of inventory sold to customer during a period; also called cost of sales; normal debit balance account, increase a Dr., thus decrease a Cr., expense, IS
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| net income (for merchandiser) (equation) | show 🗑
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| show | net sales minus cost of goods sold; also called gross margin
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| show | net sales minus cost of goods sold; also called gross profit
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| show | goods that a company owns and expects to sell to customers; also called merchandise or inventory; normal debit balance account, increase a Dr. account, thus decrease a Cr., asset, BS
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| inventory | show 🗑
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| show | (a) cash purchases of merchandise to (b) inventory for sale to (c) credit sales to (d) accounts receivable to (e) receipt of cash
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| show | MAS
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| MAS (equation) (beginning inventory) | show 🗑
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| beginning inventory | show 🗑
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| show | NP
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| cost of goods sold | show 🗑
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| show | EI
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| MAS (equation) (ending inventory) | show 🗑
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| show | perpetual system and periodic system
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| perpetual inventory system | show 🗑
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| show | method that records the costs of inventory purchased but does not continuously track the quantity available or sold to customers; records are updated at the end of each period to reflect the physical count and costs of goods available
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| hybrid inventory system | show 🗑
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| inventory (equation) | show 🗑
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| inventorial costs | show 🗑
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| list price | show 🗑
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| selling price | show 🗑
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| trade discount | show 🗑
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| credit terms | show 🗑
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| show | abbreviation for end of month; used to describe credit terms for credit transactions
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| show | credit terms for sellers requiring payment within 10 days after the end of month
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| show | net 30 days
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| show | time period that can pass before a customer's payment is due
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| cash discount | show 🗑
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| purchases discount | show 🗑
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| sales discount | show 🗑
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| "2/10, n/30" | show 🗑
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| show | time period in which a cash discount is available and the buyer can make a reduced payment
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| gross method | show 🗑
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| purchases returns | show 🗑
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| show | refer to a seller granting a price reduction (allowance) to a buyer of defective or unacceptable merchandise
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| debit memorandum | show 🗑
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| trade discounts | show 🗑
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| show | abbreviation for net (or all)
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| show | abbreviation for free on board; the point when ownership of goods passes to the buyer
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| FOB shipping point (or factory) | show 🗑
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| FOB destination | show 🗑
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| show | a buyer is responsible for paying transportation costs payment made to carrier directly to the seller, when the cost principle requires that the transportation cost of a buyer be part of the cost of merchandise inventory
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| transportation/freight-out | show 🗑
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| show | information outside the usual accounting records; also called supplemental records; refer to information outside the usual ledger accounts
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| gross method (sales) | show 🗑
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| net method | show 🗑
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| sales discounts | show 🗑
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| show | have normal debit balance, thus increases a Dr. and decrease a Cr., IS.
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| sales return | show 🗑
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| show | customer dissatisfied with a purchase, keep the merchandise with a partial refund
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| sales returns and allowances (part 1) | show 🗑
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| sales returns and allowances (part 2) | show 🗑
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| sales returns and allowances (part 3) | show 🗑
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| credit memorandum | show 🗑
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| shrinkage | show 🗑
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| temporary accounts (merchandisers) (part 1) | show 🗑
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| temporary accounts (merchandisers) (part 2) | show 🗑
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| two income statement format | show 🗑
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| show | income statement format that shows subtotals between sales and net income, categorizes expenses, and often reports the details of net sales and expenses
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| selling expenses | show 🗑
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| general and administrative expenses | show 🗑
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| nonoperating activities | show 🗑
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| show | commonly include interest revenue, dividend revenue, rent revenue, and gains from asset disposals
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| show | commonly include interest expense, losses from asset disposals, and casualty losses
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| net income | show 🗑
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| show | income statement format that subtracts total expenses, including cost of goods sold, from total revenues with no other subtotals
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| classified balance sheet (merchandiser) | show 🗑
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| show | a measure of a merchandiser's ability to pay current liabilities (referred to as it liquidity; also called quick ratio, is defined as quick assets (cash, short-term investments, and current receivables divided by current liabilities
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| acid-test ratio (part 2) | show 🗑
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| show | cash and cash equivalents + short terms investments + current receivables / current liabilities
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| gross margin ratio (gross profit ratio) | show 🗑
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| show | net sales - cost of goods sold / net sales
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| show | periodic system, temporary account that accumulates the cost of all purchase transactions during each period; has a normal balance, thus increases a Dr., and decreases a Cr., BS
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| show | periodic system, temporary account that accumulates discounts taken during the period; contra purchase (expense) account; normal credit balance; thus increase a Cr.; and decrease a Dr.; BS; decrease cost of merchandise available for sale
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| show | temporary account accumulates the cost of all returns and allowances; contra purchase (expense) account; normal credit balance, thus increase a Cr., decrease a Dr.; BS; decrease cost of merchandise available for sale
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| show | cost is recorded in a temporary account; normal debit balance account; thus increasing a Dr., decrease a Cr.; BS; increases merchandise available for sale
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| sales returns and allowances (account type) | show 🗑
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| show | owner of goods held by another party who will sell them for the owner.
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| show | receiver of goods owned by another who holds them for purposes of selling them for the owner.
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| net realizable value | show 🗑
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| four methods of inventory systems | show 🗑
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| show | method to assign cost to inventory that assumes items are sold in the order acquired; earliest items purchased are the first sold
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| Last in, first out (LIFO) | show 🗑
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| show | method for assigning inventory cost to sales; the cost of available-for-sale units is divided by the number of units available to determine per unit cost prior to each sale, which is then multiplied by the units sold to yield the cost of that sale
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| specific identification | show 🗑
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| weighted average (equation) | show 🗑
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| lower of cost or market | show 🗑
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| inventory turnover | show 🗑
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| show | inventory turnover = cost of goods sold / average inventory
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| show | estimate of number of days needed to convert inventory into into receivables or cash; equals ending inventory divided by cost of goods sold and then multiplied by 365, also called days stock on hand
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| show | day's sale in inventory = ending inventory / cost of goods sold x 365
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| show | requires a company to use the same accounting methods period after period so that financial statements are comparable across periods
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| show | method for estimating ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail
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| gross profit method | show 🗑
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| average inventory | show 🗑
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Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
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To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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Created by:
ryanriggs18
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