Chapter 10 Flashcards
1
Q
merchandising business
A
a business that sells goods (inventory) for a profit
2
Q
merchandise inventory (2 points)
A
SOLD
* sold during fiscal year
* on income statement
* expense
NOT SOLD
* still on hand/on shelves
* balance sheet
* current asset
3
Q
periodic system
A
- accounting system/method for inventory
- it assumes inventory is updated and recorded only once a year (end of fiscal period)
4
Q
Cost of Goods Sold formula (COGS)
A
Beginning Inventory (Jan 1) + (Purchases - Purchase R/A - Purcahses Discounts) + Freight-in - Ending Inventory (Dec 31)
5
Q
gross profit
A
sales - COGS
6
Q
purchases account
A
- buying of inventory to be sold during the fiscal year
- expense account
7
Q
freight-in account
A
- records the shipping charges to bring goods to the store
- expense
8
Q
credit invoice
A
an invoice that reverses the purchase order and purchase is refunded
9
Q
Sales Returns & Allowances account
A
- contra sales account
- debit entry
10
Q
Purchase Returns & Allowances
A
- contra purchase account
- credit entry
11
Q
discount allowed
sales discount
A
- contra account
- debit entry
12
Q
discount earned account
purchase discount
A
- contra account
- credit entry
13
Q
merchandise inventory account
A
- on balance sheet
- ending inventory figure only calculated at the end of the year
