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Accy 201 Burney Exam 2 > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

Merchandising Inventory

A

Goods that a company buys to resell

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2
Q

Merchandiser

A

one who buys and sells merchandise

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3
Q

Wholesaler

A

Buys from manufacturer and sells to retailers

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4
Q

Retailer

A

buys from manufacturer or wholesaler and sells to consumer

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5
Q

Merchandising Inc Stmt

A

sales

<cost>
Gross profit
<selling>
<general>
net income
</general></selling></cost>

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6
Q

Sales

A

revenue stream

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7
Q

Cost of goods sold (CGS)

A

expense- the cost of stuff you had to buy before you could sell it

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8
Q

Gross profit

A

what you are making on selling the goods before other expenses

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9
Q

Merchandise inventory

A

current asset, product a company owns and expects to sell, valued at a cost of goods+ shipping+getting them ready

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10
Q

Merch inventory turns into what when sold

A

CGS (expense)

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11
Q

Operating Cycle

A

purchase of merch on shelf as inventory for sale
sales on credit billed as A/R receipt of cash

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12
Q

What cycle do we want to shorten and why

A

the operating cycle to make more profit by efficieny

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13
Q

Calculation of CGS

A

Beg inventory
+purchases
+goods avail for sale

<end>
=CGS
</end>

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14
Q

Control Accounts

A

Summary of subsidiary (A/R, A/P, inventory)

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15
Q

subsidiary ledger

A

detail of each individual account

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16
Q

what are the two methods of keeping track of inventory

A

periodic and perpetual

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17
Q

periodic

A

count at the end of the period

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18
Q

perpetual

A

keep up as you sell

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19
Q

physical inventory

A

count taken of inventory at least once per year under both methods (counts for shrinkage)

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20
Q

shrinkage

A

theft, damage, obsolescence

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21
Q

gross method

A

keeps up with the details

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22
Q

net method

A

smushes together F/S presentation, requires estimates for discounts and returns

23
Q

trade discount

A

reduction form catalog list price

24
Q

purchase discount

A

buyer

25
Q

sales discount

A

seller

26
Q

credit terms

A

2/10 net 30
2% discount if paid within 10 days

27
Q

credit period

A

time before full payment due

28
Q

discount period

A

time to get discount by paying fast

29
Q

freight in

A

buyer- cost to get merchandise delivered, added to cost of inventory

30
Q

freight out

A

seller- cost to get merch to buyer, selling expense

31
Q

FOB shipping point

A

Title passes at shipping
buyer pays freight

32
Q

FOB destination

A

title passes at destination
seller pays freight

33
Q

Cost of purchases

A

invoice cost

<purchase>
<purchase>
\+freight in
=net cost of purchases
</purchase></purchase>

34
Q

purchase merchandise (entry periodic)

A

debit: purchases
credit: A/P

35
Q

purchase merchandise (entry perpetual)

A

debit: merchandise inventory
credit: A/P

36
Q

Purchase discount/paying the bill (entry periodic)

A

debit: A/P
credit: purch disc, cash

37
Q

Purchase Discount/ Paying the bill (entry perpetual)

A

Debit: A/P
Credit: Merch Inv, cash

38
Q

Purchase Return (entry periodic)

A

Debit: A/P
Credit: Purchase Return

39
Q

Purchase Return (entry perpetual)

A

Debit: A/P
Credit: Merch Inv

40
Q

Freight in (Entry Periodic)

A

Debit: Freight in
Debit: Cash

41
Q

Freight In (Entry Perpetual)

A

Debit: Merch Inv
Credit: Cash

42
Q

Sale (Entry Periodic)

A

Debit: A/R
Credit: Sales

43
Q

Sale (Entry Perpetual)

A

Debit: A/R
Credit: Sales
Debit: CGS
Credit: Merch Inv

44
Q

Sales Disc/ Bill Paid (Entry Periodic)

A

Debit: Cash, Sales Disc
Credit: A/R

45
Q

Sales Disc/ Bills paid (Entry Perpetual)

A

Debit: Cash, Sales Disc
Credit: A/R

46
Q

Sales Return (entry periodic)

A

Debit: sales return
Credit: A/R

47
Q

Sales Return (Entry Perpetual)

A

Debit: Sales Return
Credit: A/R
Debit: Merch Inv
Credit: CGS

48
Q

End of Inv of one period becomes…

A

Beg Inv of next period

49
Q

Adjusting Entry For Shrinkage (Under Perpetual)

A

Debit: CGS

Credit: Merch Inv

50
Q

Revenue Recognition Rules

A

Record sales at amount expected to be received

51
Q

Periodic Closing

A

Remove beg inv, add end inv

52
Q

Perpetual Closing

A

pick up additional accounts

53
Q

Financial Statement Presentation

A

Gross sales

<sales>
<sales>
=Net sales
</sales></sales>

54
Q

Single Step Income statement

A

Not as informative or common as the multistep

Accy 201 Burney Exam 2 (4 decks)

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