exam 2 Flashcards
- The fees associated with credit card sales are periodically recorded as expenses. Explain
True or false
They involve revenue and operating expenses. Retailer pays a fee to the credit card company.
periodic system
determines inventory on hand (physical inv) with a physical count each period
perpetual system
inventory updated in each transaction
journalize returnED inv
Dr customer refound payable
Cr acct rec (pago en tarjeta)
Dr inv
Cr estimated return inventory
merchandise two components
Dr accts recivable or cash
Cr sales
Dr COGS
Cr inventory
FOB shipping point
buyer responsible for freight cost: (title of merchandise passes to buyer when shipped from the seller)
FOB destination
seller responsible for freight cost: (title of merchandise passes to buyer when it arrives to buyer)
income statement is not = to
operating income
FIFO
oldest inventory gets sold first
LIFO (either perpetual or periodic)
newest inventory gets sold first
When prices are rising
the newer inventory is more expensive
When prices are falling
the newer inventory is cheaper
Sarbanes-Oxley applies to
publicly held companies
the purpose of the Sarbanes-Oxley Act
mantain public confidence and trust in financial reporting puts emphasizes on effective internal control.
Internal control
Safeguard its assets.
accurate info
Ensure compliance with laws and regulations.
internal control limited by
human error/fraud, cost-benefit considerations
control enviroment
Tone at the top
True or false: srong internal control system over cash, it is important to have the duties related to
cash receipts and cash payments divided among different employee
True- 3rd element: control procedures — Separate out responsibilities and operations
bank reconciliations to
prevent fraud, and company cash records mathcing the bank’s
Days to sell measures___
the length of time it takes to acquire, sell, and replace inventory . The lower the quicker the company sells. = 365/inventory turnover
inventory turnover
number of times inventory is sold. The higher the better. = COGS/ inventory avg
operating income =
gross profit - operating expenses AND gross profit = sales-COGS
how do u calculate beginning balance
Beg.+ collection - disbursements= ending balance (disbursements= cash payments)
weigthed averrage cost
total unit cost / TOTAL UNITS
