FABM

Question 1

income

Answer 1

Income which
increases in economic benefits during the period in the form of inflows or enhancement of
assets or decreases of liabilities that result in increases in equity, but does not includes those
relating to investments by the business owners. It includes both revenue and gains. Revenue
arises in the course of ordinary activities of a business

Question 2

Expenses

Answer 2

Expenses which decreases in economic benefits during the
period in the form of outflows or depletions of assets or increases of liabilities that result in
decreases in equity, other than those relating to distributions to the business owners.

Question 3

Expenses

Answer 3

Expenses which decreases in economic benefits during the
period in the form of outflows or depletions of assets or increases of liabilities that result in
decreases in equity, other than those relating to distributions to the business owners.

Question 4

Single statement

Answer 4

in a
single statement of comprehensive income, in which case the statement of comprehensive income presents all items of income and expense recognized in the period;

Question 5

Two statement

Answer 5

n two
statements—an income statement and a statement of comprehensive income—in which case
the income statement presents all items of income and expense recognized in the period
except those that are recognized in total comprehensive income outside of profit or loss as
permitted or required by this Standard.

Question 6

sale

Answer 6

the total amount of revenue that the company was able to generate
from selling products

Question 7

sales

Answer 7

refers to the revenue earned by a merchandising business from
selling of goods.

Question 8

contra revenue

Answer 8

Sales Returns record returns of customers or
allowances for such returns.

Question 9

sales returns

Answer 9

occur when customers return their products for reasons such as but
not limited to defects or change of preference

Question 10

sales discount

Answer 10

is discount given to customers who pay early and is also known as
cash discount. Sales discount is awarded to customers who pay earlier or before the due
date

Question 11

sales returns and allowances

Answer 11

s an account use to
record the merchandise returned to us by the buyer due to damages and defects of
merchandise sold to them.

Question 12

gains

Answer 12

Represent other items that meet the definition of income and may or may not
arise in the course of the ordinary activities of an entity.

Question 13

Cost of goods sold

Answer 13

This account represents the actual cost of
merchandise that the company was able to sell during the year.

Question 14

Gross profit

Answer 14

is the total revenue minus the expenses directly related to the cost of
sale, called the cost of goods sold.

Question 15

net income

Answer 15

reflects the total residual income that remains after accounting for all
cash flows, both positive and negative.

Question 16

beginning inventory

Answer 16

is the amount of inventory at the beginning of the accounting
period. This is also the amount of ending inventory from the previous period.

Question 17

purchase discount

Answer 17

s account title used to record the discounts granted by the seller
for prompt payment of account.

Question 18

purchases returns and allowances

Answer 18

s accounts used to reflect the amount returned
to the seller due to defect or damage or when the item received is not in accordance with the
specification.

Question 19

net purchases

Answer 19

is Purchases minus the contra purchases account (Purchase
discount and purchase returns)

Question 20

purchas

Answer 20

is an amount of goods bought during the
current accounting period

Question 21

contra purchases

Answer 21

is an account that is credited being “contrary”
to the normal balance of purchases account.

Question 22

contra purchases

Answer 22

is an account that is credited being “contrary”
to the normal balance of purchases account.

Question 23

freight in

Answer 23

an account used to record transportation costs of merchandise
purchased by the company

Question 24

Cost of good available for sale

Answer 24

You have to add beginning inventory and net cost of purchases
for you to get the cost of goods available for sale.

Question 25

ending inventory

Answer 25

s the total cost of inventory unsold at the end of the accounting
cycle.

Question 26

gross profit formula

Answer 26

Sales less cost of goods sold

Question 27

General and administrative expenses

Answer 27

These expenses are not
directly related to the merchandising function of the company but are necessary for the
business to operate effectively.

Question 28

General and administrative expenses

Answer 28

These expenses are not
directly related to the merchandising function of the company but are necessary for the
business to operate effectively.

Question 29

selling expenses

Answer 29

these expenses are those that are directly related to
the main purpose of a merchandising business: the sale and delivery of merchandise. These
do not include cost of goods sold and contra revenue accounts.

Question 30

selling expenses

Answer 30

these expenses are those that are directly related to
the main purpose of a merchandising business: the sale and delivery of merchandise. These
do not include cost of goods sold and contra revenue accounts.

Question 31

net income for a positive result while net Loss for a negative result

Answer 31

Gross Profit less general and administrative expenses and selling expenses will yield

Question 32

net income for a positive result while net Loss for a negative result

Answer 32

Gross Profit less general and administrative expenses and selling expenses will yield

Question 33

line item

Answer 33

A line item is
a caption used to describe a group of accounts with similar nature.