chapter 10

Question 1

Merchandise Business

Answer 1

• Sells goods instead of a service
• have to track the purchase, cost, and sale of goods

Question 2

inventory

Answer 2

The “goods” a business has on hand

Question 3

‘Gross Profit’

Answer 3

amount item is sold for minus how much it was purchased for

Question 4

‘Cost of Goods Sold’

Answer 4

the amount:
Of inventory that was sold during the fiscal period.
It is determined by taking a ‘physical
inventory.’

Question 5

Formula

Answer 5

Beginning inventory + ([purchases - purchase r&a and discounts] + freight in) + ending inventory

Question 6

Purchase POV invoice received, return, discount

Answer 6

Purchases
HST recoverable
A/P
A/P
Purchase r+a
HST recoverable
A/P
Bank
Discounts earned

Question 7

Sales POV invoice issued

Answer 7

A/R
Sales
HST payable
Sales r+a
HST payable
A/R
Bank
Discounts allowed
A/R

Question 8

Freight-In

Answer 8

Getting merchandise ordered into our hands

Question 9

Freight-Out

Answer 9

It is an operating expense

Question 10

Sales discounts

Answer 10

A reduction in the amount of a sales invoice if payment is made on, or before, the date stated on the invoice.

Question 11

Terms of Sale

Answer 11

Tells when goods should be paid and whether/how much a cash discount is offered.