Chapter 5 Flashcards

1
Q

A business that sells merchandise, or goods to customers

A

Merchandiser

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

An asset account for the merchandise that a business sells to a customer

A

The merchandise Inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A type of merchandiser who bus goods from a manufacturers and then sells them to retailers

A

Wholesaler

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

A type of merchandiser who buys merchandise either from a manufacturer or a wholesaler and then sells those goods to consumers

A

Retailer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the 3 steps to a merchandisers operating cycle

A
  1. Purchase inventory from a vendor
  2. Sell inventory to a customer
  3. Collect cash from the customer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The individual or business from whom a company purchases goods

A

Vendor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

The cost of the merchandise inventory that the business has sold to customers

A

Cost of goods sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is gross margin and what is the formula

A

The extra amount the company receives from the customer over what the company paid to the vendor. Net sales minus cost of goods sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Expenses, other than Cost of Goods Sold, that are incurred in the entity’s major ongoing operations

A

Operating expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the two main types of inventory accounting systems that are used.

A
  1. Periodic inventory system
  2. Perpetual inventory system
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A seller’s request for payment from the purchaser

A

invoice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A situation in which sellers allow purchasers to return merchandise that is deflective, damaged, or otherwise unsuitable. Transaction between suppliers and merchandisers

A

Purchase return

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

An amount granted to the purchaser as an incentive to keep goods that are not as ordered

A

Purchase allowance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

A discount that businesses offer to purchasers as an incentive for early payment

A

Purchase discount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

The payment terms of purchase or sale as stated on the invoice

A

Credit terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

When the buyer takes ownership to the goods when the goods leave the sellers place of business and pays freight

A

FOB Shipping point

17
Q

When buyer takes ownership to the goods at the delivery destination point and seller pays freight

A

FOB destination

18
Q

Transportation cost to ship goods to the purchaser’s warehouse: therefore it is freight on purchased goods

A

Freight in

19
Q

Transportation cost to ship goods out of the sellers warehouse. Freight on goods sold

A

Freight out

20
Q

The amount a merchandiser earns from selling its inventory.

A

Sales Revenue

21
Q

Reduction in the amount of revenue earned on sales for early payment

A

Sales discount

22
Q

What does a discount of 3/10 n/30 mean

A

A discount of 3 percent if paid in 10 days, payment in full due in 30 days

23
Q

Decreases in the seller’s receivable from a customer’s return of merchandise or from g the customer an allowance from the amount owed to the seller

A

Sales returns and allowances

24
Q

A reduction in the amount owed by a customer due to the return of merchandise

A

Sales return

25
A reduction in the amount owed by a customer that does not involve the return of merchandise inventory
Sales allowance
26
The loss of inventory that occurs because of theft and damage
inventory shrinkage
27
Four steps for closing accounts of merchandiser
1. Make revenue accounts equal 0 2. Make expense accounts equal 0 3. Make the income summary equal 0 via retained earnings 4. Make dividends equal 0
28
The amount a company has earned on sales after returns, allowances, and discounts have been taken out. State formula
Net Sales Revenue net sales = sales revenue - sales returns - sales discounts
29
Income statement format that contains subtotals to highlight significant relationships
Multi-step income statement
30
Operating expenses related to marketing and selling the company's goods and services
selling expense
31
Operating expenses incurred that are not related to marketing the company's goods and services
administrative expenses
32
Measures the results of the entity's major ongoing activities. State the formula
Operating Income
33
Revenues or expenses that are outside the normal day to day operations
other income and expenses
34
Expense incurred by a corporation related to taxes
income tax expenses
35
How do you calculate gross profit percentage
Gross profit/net sales revenue
36