International accounting standards 5 Flashcards
Merchandise (znaczenie)
towar
wholesaler (znaczenie)
hurtownik
retailer (znaczenie)
detalista
consumer (znaczenie)
konsument
What is the primary source of merchandising companies?
Merchandising companies buy and sell goods
Their primary source of revenues is called „sales revenue” or „sales”.
What is cost of goods sold?
- Not used in a service business
- It is the total cost of merchandise sold during the period
gross profit (znaczenie)
zysk brutto
Income Measurement (znaczenie)
pomiar dochodu
Income measurement:
Sales
-Cost of goods sold
= Gross profit
- operating expenses
= net income
Perpetual system:
- Maintain detailed records of the cost of each inventory purchase and sale
- Records continuously show inventory that should be on hand for every item
-Company determines cost of goods sold each time a sale occurs
freight costs (znaczenie)
koszty przewozu
Purchase returns and allowances:
- Purchaser may be dissatisfied because goods are damaged or defective, of inferior quality, or do not meet specifications
- Purchase Return: Return goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash
- Purchase Allowance: May choose to keep the merchandise if the seller will grant a reduction of the purchase price
Purchase discounts:
Credit terms may permit buyer to claim a cash discount for prompt payment.
Purchaser saves money. Seller shortens the operating cycle by converting the accounts
receivable into cash earlier
Example: 2/10, n/30 [2% discount if paid within 10 days, otherwise net amount due
within 30 days]
Example: 1/10 EOM [1% discount if paid within first 10 days of next month]
Example: n/10 EOM [Net amount due within the first 10 days of the next month]
Sales returns and allowances:
-“Flip side” of purchase returns and allowances
- Contra revenue account to Sales Revenue (debit)
- Sales not reduced (debited) because it would obscure
importance of sales returns and allowances as a
percentage of sales and Could distort comparisons
Income statement:
- Primary source of information for evaluating a company’s performance
- Format is designed to differentiate between various sources of income and expense
Gross profit rate =
gross profit/net sales
other income
- Interest revenue from notes receivable and marketable securities
- Dividend revenue from investments in capital stock
- Rent revenue from subleasing a portion of the store
- Gain from the sale of property, plant, and equipment
other expense
- Casualty losses from such causes as vandalism and accidents
- Loss from sale or abandonment of property, plant, and equipment
- Loss from strikes by employees and suppliers
