chapter 6: merchandising operations and multistep income statement

Acme, inc. has cost of goods sold of 2,000. if the beginning inventory was 2,100 and ending inventory was 500, acmes purchases must have been ______

BI + P - EI = CGS 2100+p-500=2000 -> p = 400

using a perpetual inventory system, when a company records a sale of merchandise, it must also record _____

a decrease in its inventory and costs of goods sold, which will be reported on the income statement

purchase transactions affect the

balance sheet and not the income statement

the inventory balance on the balance sheet reports the ______

cost of good available for sale

in a perpetual system, the entry to record the sale of merchandise to a customer on account would include a ______

credit to inventory and debit to cost of goods sold

inventory is reported as

a current asset on the balance sheet

using a perpetual inventory system, the entry to record the return of goods you previously purchased on account includes a ______

debit to accounts payable and credit to inventory

in a perpetual system, the entry to record the sale of merchandise includes a _______

debit to cost of goods sold

the gross profit percentage measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold. this ratio is used for:

making comparisons over time and compare one company to another.

the _______ inventory system requires that the inventory account be updated only at the end of the accounting period.

periodic

which inventory system requires that the inventory account be updated at the time merchandise is sold?

perpetual system

the cost of goods sold equals beginning inventory plan ______ minus ending inventory.

purchases

the journal entry to record the payment for merchandise purchased on account will cause stockholders equity to _____

remain unchanged

the operating cycle is a series of activities that the company undertakes to generate ______ and, ultimately, cash.

revenue

proper order of an income statement

sales revenue sales returns, allowances and discounts net sales cost of goods sold gross profit

what would be considered inventory for a merchandiser?

acquired goods for resale

in a perpetual system, the entry to record the sale of merchandise to a customer on account would include a:

credit to inventory, debit to accounts receivable, debit to costs of goods sold, and credit to sales revenue

in a perpetual system, the ________ account is debited when a company purchases merchandise on account

inventory

in a periodic system, the entry to transfer beginning inventory and purchases into cost of goods sold includes a _____

credit to purchases, credit to inventory (beginning balance) and debit to costs of goods sold

what is reported on the income statement?

sales revenue, gross profit and costs of goods sold

XYZ company sold merchandise for 5,000, with payment terms of 2/10, n/30. if the customer pays within the discount period and takes the discount, XYZ will receive ____

5000*.02 = 100 5000-100= 4900

Berkley company had beginning inventory of 4000 and purchases of 20,000. if half of its inventory was sold, Berkley goods available for sale will ______

be split between cost of goods sold and ending inventory

in the periodic system, the end of the period adjustments to transfer beginning inventory into cost of goods sold requires a ______ to cost of goods sold

debit

gross profit percentage is calculated as

net sales - cgs / net sales * 100

in the perpetual inventory system....

the seller should record freight-out as selling expense and the purchaser should record freight-in as an asset, inventory

the journal entry to record the payment within the discount period for goods previously purchased on account causes _____

total assets and liabilities to decrease