FABM CHAPTER 14 Flashcards
buys goods (i.e. inventories) and sells them to
customers for a profit.
merchandising business
The goods bought by the merchandising business from its suppliers are called what?
Purchases.
The merchandiser add-up a value (i.e. markup or gross profit) to the______________ of goods and charges the total amount to the customer.
purchase prices
The merchandiser ___________ to the
purchase prices of goods and charges the total amount to the customer.
add-up a value (i.e. markup or gross profit)
The total amount charged to customers is called what?
Sales
Seller’s perspective of Agreed selling price of the goods
Sales
Buyer’ s perspective of Agreed selling price of the goods
Purchases
Seller’s perspective of Return by the buyer of defective or
non-conforming goods to the seller
Sales return
Buyer’s perspective of Return by the buyer of defective or
non-conforming goods to the seller
Purchase returns
Seller’s perspective of Agreed reduction in selling price
Sales discount
Buyer’ s perspective of Agreed reduction in selling price
Purchase discount
Seller’s perspective of Agreed reduction in selling price for
poor quality goods which the buyer
agreed to retake at reduced price
Sales allowances
Buyer’ s perspective of Agreed reduction in selling price for
poor quality goods which the buyer
agreed to retake at reduced price
Purchases allowances
Seller’s perspective of Transportation cost of bringing the
goods to buyer’s place of business
Freight-out
Buyer’ s perspective of Transportation cost of bringing the
goods to buyer’s place of business
Freight-in
This is an established price determined by reference
to a catalog or general price list before deducting any discounts.
List price
This list price less any trade discounts.
Invoice price
This is the
gross billable amount by the seller to the buyer.
Invoice price
This is the
amount that is indicated in the billing statement of the seller.
Invoice price
Pertains to a direct deduction to the invoice price on account of
volume purchases made by a buyer.
Trade discount
Trade discount is also called what?
volume discount or quantity discount
This discount is usually given when the
buyer is a fellow merchandiser in order to allow him to profit for the resale
of the goods to his customers.
Trade discount
this is an additional
discount to the invoice price aside from the trade discount which is given to
the buyer for early payment.
Cash discount
Cash discount is also called what?
Settlement discount,
RECORDING OF MERCHANDISING
TRANSACTIONS?
Purchasing and disbursement activities and Sales and collections activities
An account used to record the cost of goods or merchandise bought for resale during the current reporting
period.
Purchases
An account used to record the transport cost of the goods purchased.
Freight-in
This is an adjunct account (addition) to the
purchases account
Freight-in
An account used for the agreed reduction in the price of goods.
Purchase discount
This is normally given by the supplier on
account of early payment.
Purchase discount
Is a contra-account to the purchase account.
Purchase discount
An account used to record the cost of merchandise returned to the supplier and including
price reductions to the purchase which is granted by a supplier on account of unsatisfactory goods delivered.
Purchase returns and allowances
An account used to record advance payments made to a supplier for goods to
be purchased in the future.
Advances to supplier
Purchases normal balance?
Debit
Freight-in normal balance?
debit
Purchase discount normal balance?
credit
Purchase returns and allowances normal balance?
credit
Advances to supplier normal balance?
Asset Account and debit
Involves selling of
goods and collecting customers’ accounts.
sale and collection function
An account used to record the selling price of goods to a customer.
Sales
An account used to record the transport cost of the goods sold to customers.
Freight-out-
If goods are purchased from
the business warehouse, customers normally what?
shoulder the freight of their goods.
Freight-out may alternatively called what?
delivery expense.
An account used to record the agreed reduction in the price of goods sold to customers.
Sales discount
This is the equivalent a of purchase discount from the buyer’s perspective.
Sales discount
Sales discountis the equivalent a of a _________ from the buyer’s perspective.
purchase discount
An account used under a periodic inventory system to record the amount of sales returned
by customers including reductions in selling prices granted to customers because the merchandise was not satisfactory to a buyer.
Sales returns and allowances
An account representing advance payment made by a customer for goods to be delivered in the
future.
Advances from customer
Sales has a normal balance of?
credit
Freight-out- has a normal balance of?
of an expense account or debit
Sales discount has a normal balance of?
debit
Sales returns and allowances has a normal balance of?
debit
Advances from customer has a normal balance of?
credit
Ownership to the goods transfer to
the buyer from the moment the goods leave the warehouse of the seller which is normally the shipping date or invoice date.
FOB shipping point
Ownership to the goods transfer to the
buyer from the moment the goods arrive at the warehouse of the buyer which is normally the delivery receipt date.
FOB Destination
the freight shall be paid by the
seller to the freight or cargo forwarder upon release
of the goods in his premises
Freight prepaid
The freight shall be paid by the
buyer to the freight or cargo forwarder upon arrival
of the delivery in his premises
Freight collect
Date of recognition of purchases for FOB destination
When the buyer
receives the goods
Date of recognition of sales for FOB Destination
When the buyer
receives the goods
Date of recognition of purchases for FOB shipping point
At the point of shipment
Date of recognition of sales for FOB shipping point
At the point of shipment
