Chapter 5 Flashcards
What are the two entries for sale of merchandise?
1) Debit:Accounts Receivable
Credit: Sales Revenue
2) Debit: Costs of Goods Sold
Credit: Inventory
What are the entries for sales returns and allowances?
1) Debit: Sales Returns and Allowances
Credit: Accounts Receivable
2) Debit:Inventory
Credit:Cost of Goods Sold
What are the entries for sales discounts?
Debit: cash and sales discount
Credit: Accounts Receivable
What kind of accounts are sales returns and allowances and sales discount?
-contra revenue
+/-
Freight-In
Business pays to get merchandise into store
Freight-Out
- when business pays to ship to customer
- it is an operating expense
FOB Shipping point
-means title transfers at the manufacturer’s plant
FOB destination
mean title transfer at the buyer’s business/store. Seller pays for shipping and buyer does not until its in possession
How do we keep track of periodic?
purchase accounts
When is the only time to determine cost of goods sold for periodic?
when the count is done
What does the count do for perpetual?
verifies the physical asset and gives an estimate of waste,loss, and theft of inventory
Write the Formulas……
- for gross profit ratio
- Gross profit plus what gets net sales
- the beginning inventory one
- how to find net sales individually
Every sales transaction is supported by what document?
-sales invoice
What does a purchaser prepare in relation to the invoice….?
purchase order
purchases less what gets you net purchases
- purchase discounts
- purchase returns and allowances
