Merchandising and inventory Flashcards

1
Q

Goods purchased for resale at a profit
-Ex. Caskets, urns, jerwlery

A

Merchandise/ inventory

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2
Q

An expense account to record the buying of merchandise for resale

A

Purchases

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3
Q
  • Contra purchases account
    -Record the return of merchandise to the manufacturer or supplier
    -Usually defects in workmanship and/ or inferior product quality
A

Purchases returns and allowances

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4
Q

-Contra purchase account
-Record discount taken on inventory purchases
-Encourage prompt payment of their invoice

A

Purchase discounts

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5
Q

Purchases - any returns - any discounts

A

Net purchases

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6
Q

A revenue account to record the earnings of revenue

A

Sales

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7
Q

-Contra sales account
-Records credit given to a customer
-Usually shortages or damaged goods

A

Sales returns and allowances

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8
Q

-A contra sales account
-Records discounts given to a customer
-Incentive for prompt payment

A

Sales discounts

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9
Q

Sales - sales returns - sale discounts

A

Net sales

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10
Q

If someone receives a discount of 6/15, n/30 what does all of that mean

A

6/15 means that they would receive a 6% discount if they pay within the first 15 days and n/30 means that the payment is due within 30 days

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11
Q

When goods are shipped, the ownership is transferred when they are delivered

A

FOB destination

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12
Q

When goods are shipped, ownership is transferred when they are shipped

A

FOB shipping

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13
Q

What is the inventory equation for calculating COGS

A

COGS = beg year inventory + inventory purchases - end inventory

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14
Q

-Does not maintain a continual track of inventory levels and COGS
-Focus: how much did we start with, how much purchased, how much ended with?
-Inventory costing done periodically when physical count is done

A

Periodic inventory

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15
Q

-Continual track of inventory and calculations of COGS
-Efficient management
-Focus: let the computers work
-Continuous inventory costing at each sale

A

Perpetual inventory

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16
Q

What are the three methods of inventory costing

A
  1. FIFO (first in, first out)
    -Oldest products in an inventory are sold first
  2. LIFO (last in, first out)
    -Most recent products in an inventory are sold first
  3. Weighted average
    -Total dollar value of the inventory is averaged out equally among all units
17
Q
A