Ch. 6 Terms and concepts

Inventory for a merchandiser

Acquired goods for resale

periodic inventory system

updates the inventory records for merchandise purchases,sales,and returns only at the end of the counteracting period.

Perpetual inventory system

updates inventory records every time an item is bought, sold,or returned.

The entry to record a sales return that results in the issuing of a gift card is recorded with a debit to Sales Revenue and a credit to _________________ and also a debit to _________________ and a credit to CSG.

Deferred Rev and inventory.

____________ income statement shows how much profit is earned from product sales without being clouded by other operating expenses and separates other items that are not core to the operations of the company.

Multistep

Gross profit equation

Net Sales- Cost of goods sold

order of income statement line

Sales revenue Sales Returns, allowances and discounts Net Sales CGS GP

What account will require a credit to the inventory account in a perpetual inventory system?

Selling inventory on account/ cash

Purchase transactions affect the ___________

balance sheet and not the income statement

Merchandisers record rev when they

fulfill their performance obligations by transferring control of the goods to customers.

the __________ cycle is a series of activities that the company undertakes to generate sales and ultimately cash.

operating

If a seller sells its merchandise with the shipping terms FOB destination, it credits Revenue when the merchandise is_______.

received by the customer.

what accounts will credit to inventory account in a perpetual inventory sys?

selling inventory for cash and on account

If sales returns and allowances are a large dollar amount relative to initial sales revenue, it may mean

there are produce quality issues