Accounting 1-6
Credit terms 2/10, N/30 are interpreted as
2% discount in 10 days and net total paid in the remaining 30 days
A company's gross profit is $837 and it's net sales are $3478, what is the gross margin ratio
837/3478
Dividend
A payment to an owner
Entry to record purchase of office supplies on credit
Accounts Payable Inventory
Entry to record company received $30 from customer for services on account
Accounts Payable Service
Adjusting entry to record accrued revenue
Accounts receivable Revenue
What types of accounts are permanent?
Asset Liability, Owner's Equity
merchandise inventory is what type of account
Asset on the balance sheet
What accounts have normal debit balances
Asset, Contra liability, Owners drawing, expense, loss
Prepaid expenses are:
Assets
Resources expected to yield future benefits
Assets
Financial statement that reports company's financial position at a point in time
Balance sheet
How does a merchandising company earn revenue
Buying and selling goods
Order of assets on classified balance sheet
CRISP- Cash, receivables, inventory, supplies, prepaids
Names of the quick asset
Cash, accounts receivable, other current assets excluding inventory
What accounts have normal credit balance
Contra asset, liability, equity, revenue, gain
two common subgroups of liabilites on classified balance sheet
Current and long-term
Current ratio used to?
Current assets/Current liabilities
Adjusting entry to record an accrued expense
Expense Payable
Which costing method will always result in same values for ending inventory and COGS whether using periodic or perpetual?
FIFO
Cash Flow Statement
Financial statement identifying where a company's cash came from and went to
Annual reporting period of any 12 consecutive months is called
Fiscal year
A collection of accounts and their balances
General Ledger
Sales less sales discounts and returns =
Gross profit
special account used only in closing process
Income Summary Account
Financial Statement that reports revenues and expenses
Income statement
Financial statements prepared in what order?
Income, Statement of retained earnings, Balance sheet, Cash flow
Adjusting entries affect which statement
Income, balance sheet
Days' sales in inventory is calculated as
Inventory/ Cost of sales X 365
During period of steadily rising costs, which inventory valuation method yields lowest net income?
LIFO
Creditors claims on assets
Liabilities
What type of account is unearned revenue?
Liability
In applying lower of cost or market, market is defined as
Market is defined as the market the company buys and sells in
Beginning inventory plus net purchases equals
Merchandise available for sale
At end of period, COG available for sale must be allocated between
Merchandise inventory and COGS
Sales returns refer to?
Merchandise returned to the seller
Another name for temporary account
Nominal
Final step in accounting cycle
Post closing-trial balance
The process of transferring journal info to a ledger
Posting
Formula for profit margin
Profits/Sales
An account used in periodic and never in perpetual is
Purchases
Accrual basis of accounting states:
Revenues recognized when earned not received
What type of accounts are temporary?
Revenues, Expenses, Income Summary, Drawings
Going Concern
Rule that requires statements to reflect business will continue operating and not be closing
The adjusting entry to record the earned but unpaid salaries at end of accounting period
Salaries Expense Wages and salaries payable
Inventory Turnover Ratio
Sales/inventory or COGS/Average Inv
The inventory method that identifies each item in ending inventory with a specific purchase and invoice is
Specific Identification
Objectivity Principle
The concept that requires statements to be supported by independent, unbiased evidence
Debt Ratio
Total Debt/Total Assets
Which inventory valuation method tends to smooth out erratic changes in cost?
Weighted Average
Trade discount
a discount on the retail price of something allowed or agreed between traders or to a retailer by a wholesaler.
business entity
assumption that requires business be accounted for separately from owner
Income summary account is used for
temporary account,used with closing entries
