Merchandising Operations Flashcards
Two types of merchandisers
Wholesalers and retailers
What is cost of goods sold?
The cost of merchandise sold to customers during a period
….earns net income by buying and selling merchandise
Merchandiser
Products also called goods that a company acquires to resell to customers
Merchandise
An intermediary that buys products from manufacturers or wholesalers and sells them to consumers
Retailer
The amount of time allowed before full payment is due
Credit period
Informs a buyer of the sellers credit to the buyers accounts receivable
Credit memorandum
Term used to refer to loss of inventory , compare physical count. To amount recorded
Shrinkage
Which FIFO or LIFO provides a tax cut
LIFO
Internal controls
Protect assets
Ensure reliable accruing
Promote efficient operations
Urge adherence to company policies
Who oversees auditors work
(Pcaob )public company accounting oversight board
Principles of internal controls
Establish responsibilities
Maintain adequate records
Insure assets and bond key employers
Separate recording from custody of assets
Divide responsibility for related transactions
Apply technological controls
Perform regular and independent reviews
Goal of cash management
Plan cash receipts to meet cash payments when due
Keep a minimum level of cash necessary to operate
A set of procedures and approvals designed to control cash disbursements and the acceptance of obligations
Voucher system
An internal document or file used to accumulate information to control cash disembursements and to ensure that a transaction is properly recorded
Voucher
Checks the bank has paid and deducted from the customers account during the period
Canceled checks
Checks written by the depositor deducted on the depositors records and sent to the payees but not yet received by the bank for payment at the bank statements date
Outstanding checks
Deposits made and recorded by the depositor but not yet recorded on the bank statement
Deposits in transit
An amount due from another party
A receivable
Amounts due from credit sales
Accounts receivable
An amount can be ignored if its effect on the financial statements is unimportant to users business decisions
Materiality constraint
Expected proceeds from converting an asset into cash
Realizable value
A written promise to pay a specified amount of money usually with interest wither on demand or at a definite future date
Promissory note
Person to whom note is payable
Payee of the note
One who signs the note and promised to pay it at maturity
Maker of the note
Person who buys receivables
Factor
Gross profit is
Net sales-cost of goods sold
Fob stands for
Free on board
What are the temporary accounts for merchandise
Sales
Sales discounts
Sales returns and allowances
Cost of goods sold
Sells goods for the owner
Consignee
A companies ability to pay for its near term obligations
Liquidity
Set of procedures and approvals designed to control cash disbursements and the acceptance of obligations
Voucher system
Checks the bank has paid and deducted from the customers account during the period
Canceled checks
Amounts due from customers for credit sales
Accounts receivable
What type of account is allowance for doubtful accounts
A contra asset account
