ACC 211 Ch. 5
Expenses incurred in the administration or general operations of the business.
Administrative expenses
Expenses that are incurred directly in the selling of merchandise.
Selling expenses
T/F An inventory subsidiary ledger is used in a perpetual inventory system
True
This form of the balance sheet may be presented with assets on the left-hand side and the liabilities and stockholders' equity on the right-hand side.
account form
amounts owed to various creditors would be credited/debited to which account?
accounts payable
lists individual creditor accounts in alphabetical order
accounts payable subsidiary ledger
amounts due from various customers would be credited/debited to which account?
accounts receivable
lists the individual customer accounts in alphabetical order
accounts receivable subsidiary ledger
the amount of cash expected by a seller depends on all of the following execpt
advertising expense
the ratio of net sales to assets is calculated by dividing net sales by
average total assets
The ending merchandise inventory is determined by a physical count under __________
both systems
each subsidiary ledger is represented in the general ledger by a summarizing account called
controlling account
the sum of the balances of the accounts in the subsidiary ledger must equal the balance of the related
controlling account
when merchandise is sold the cost is recognized as an expense known as ___________________
cost of merchandise sold
amount of time allotted to the buyer to pay invoice
credit period
terms for when payments for merchandise are to be made are called
credit terms
accounts payable subsidiary ledger is also called
creditors ledger
the current classification of merchandise inventory on the balance sheet is as a
current asset
accounts receivable subsidiary ledger is also called
customers ledger
When the seller pays the delivery charges, the seller Delivery Expense or Freight Out.
debits
In a Perpetual inventory system:
each purchase and sale of merchandise is recorded in the inventory account and related subsidiary ledger
On the income statement for a service business, the revenues from services are reported as _______ _______
fees earned
primary ledger, which contains all of the balance sheet and income accounts is called
general ledger
the difference between the revenues and cost of merchandise sold is referred to as the
gross profit
if a company has a ratio of sales to assets of 2.20 in 2011 and 2.30 in 2012, you can most likely assume that the company has
improved the utilization of its assets to generate sales in 2012
___________ _______ _________ is determined by subtracting operating expenses from gross profit.
income from operations
inventory subsidiary ledger is also called
inventory ledger
The amount by which the merchandise for sale, as indicated by the balance of the merchandise inventory account, is larger than the total amount of merchandise counted during the physical inventory.
inventory shrinkage
The adjusting process is the same under the periodic and perpetual inventory systems except for the ________________________
inventory shrinkage adjustment
lists individual inventory by item number or bar code.
inventory subsidiary ledger
terms of purchases on account are normally indicated on the
invoice or bill
merchandise on hand at the end of an accounting period is called
merchandise inventory
A form of income statement that contains several sections, subsections, and subtotals.
multiple-step income statement
The operating expenses for a service business incurred in providing the services are subtracted from the fees earned to arrive at _____ ______
net income
An expense that cannot be traced directly to the normal operations of the business.
other expense
Revenue from sources other than the primary operating activity of a business.
other income
Most merchandise companies use computerized _______ inventory systems
perpetual
a listing of inventory on hand is called
physical inventory
__________ measures how effectively a company uses its assets to generate sales, computed as net sales divided by average total assets.
ratio of net sales to assets
This form of the balance sheet presented in a downward sequence with the liabilities and stockholders' equity sections below the assets section.
report form
the charts of accounts for a merchandising business generally
requires different accounts than a service business
When this merchandise is sold from a merchandising business, the revenue is reported as _____, and its cost is recognized as an ________.
sales ; expense
generally, amounts paid by a purchaser for merch. do not include
seller's rent
Delivery Expense is reported on the seller's income statement as a _______ _________
selling expense
A form of income statement in which the total of all expenses is deducted in one step from the total of all revenues.
single-step income statement
a large number of individual accounts with a common characteristic can be grouped together inn a separate ledger called
subsidiary ledger
FOB shipping point
the buyer pays the freight costs from the shipping point to the final destination.
In a periodic inventory system:
the inventory does not show the amount of merchandise available for sale and the amount sold
a major disadvantage of the periodic inventory system is
the inventory shrinkage is not separately determined
FOB destination
the seller pays the freight costs from the shipping point to the buyer's final destination.
report form
this form of a balance sheet reports asset, liabilities, and SE in downward sequence
Discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers
trade discounts
T/F a subsidiary ledger is a secondary ledger that supports a controlling account in the general ledger
true