Chapter 5 Review Flashcards
1
Q
What is the formula for Gross Profit
A
Sales Revenue - COGS =
2
Q
How do you calculate COGS?
A
Beginning Inventory \+Net Purchases —————————— COG Available for Sale - Ending Inventory ——————————
3
Q
FOB Shipping Point
A
Ownership of merchandise passes from buyer to seller once in transportation.
4
Q
FOB Destination
A
Ownership of merchandise switches from seller to buyer once it is in possession of buyer.
5
Q
Purchase Return
A
credit or cash refund to customer
6
Q
Purchase Allowance
A
Grant a reduction on costs of products.
7
Q
Contra Revenue Accounts
A
Sales Discount
Sales Return and Allowance
8
Q
Multi step Income Statement Components
A
Sales Cogs Gross profit Operating Expense Other Revenue and Gains Other Expense and Losses Net Income
9
Q
Gross Profit Rate
A
gross profit / net sales
10
Q
Profit Margin
A
net income / net sales
11
Q
DIFFERENCES BETWEEN PERIODIC
A
List Inventory Specifically: ex. Purchase returns and Allowances Purchase discounts Freight costs ——————— COG not recorded
12
Q
DIFFERENCES BETWEEN PERPETUAL
A
Inventory is the general term used to describe.
COGS is recorded.
Updated regularly after sales.
