exam 2

Question 1

multistep income statement

Answer 1

sales rev - COGS= GM - operating expense = operating income

Question 2

FOB destination

Answer 2

seller pays for shipping

Question 3

FOB Shipping point

Answer 3

Buyer pays for shipping

Question 4

debit

Answer 4

left

Question 5

credit

Answer 5

right

Question 6

posting

Answer 6

copying transactions data from journals to ledger accounts

Question 7

T accounts

Answer 7

simple accounts representation

Question 8

trial balance

Answer 8

schedule listing the balances of all the ledger accounts, verifies accuracy

Question 9

each time merchandise is purchased

Answer 9

inventory goes up

Question 10

each time it is sold

Answer 10

inventory goes down

Question 11

gross margin

Answer 11

sales rev - COGS

Question 12

shrinkage

Answer 12

reflects decreases in inventory for reasons other than sold to customers

Question 13

merchandise inventory

Answer 13

goods purchased for resale

Question 14

financial leverage

Answer 14

using borrowed money to increase the return on stockholders investment. It explains WHY companies are willing to accept the RISK OF DEBT