Chapter 6 Accounting
blog inc has sales of 50000 cost of goods sold of 30000 and selling expenses of 5000 the gross profit is _____.
$20,000
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 cost of goods sold -debit to accounts receive-able -credit sales revenue
in what ways are periodic and perpetual systems similar
-both record a credit to sales at the time of the sale - both record a credit to accounts payable at the time of the purchase of merchandise account
sales discount
A cash discount on sales taken by a customer
ending inventory formula
Beginning Inventory + Purchases - COGS
cost of goods sold equation
CGS = Beginning Inventory + Purchases of merchandise - Ending Inventory
multistep income statement
Reports alternative measures of income by calculating subtotals for core and peripheral business activities.
merchandising company
a company that sells goods that have been optained from a supplier
what does the gross profit percentage tell you
a higher ration means that more is available to cover operating expenses
purchase returns and allowances
a reduction in the cost of purchases associated with unsatisfactory goods
which of the following would be considered inventory for a merchandiser
acquired goods for resale
goods available for sale formula
beginning inventory + purchases
purchase discount
cash discount received for prompt payment of an account
in a periodic system the end of period adjustment that adjusts cost of goods sold for the amount in ending inventory requires a _____ to cost of goods sold
credit
in a perpetual system the entry to record the sale of merchandise includes a
debit to cost of goods sold
2/30, n/60 what does the "2" represent
discount percentage offered
goods avaliable for sale formula
ending inventory + cost of good sold
equipment proportion formula
equipment price / (equipment price + satellite price)
which of the following is merchandise inventory
goods held for sale in the normal course of business
inventories
goods held for sale in the normal course of business or used in producing other goods for sale
a subtotal on the income statement and is the amount earned from adding value to the inventory sold
gross profit
these are reported one the income statement
gross profit cost of goods sold sales revenue
how to find income from operations
gross profit - operating expenses
gross profit percentage formula
gross profit / net sales
Gross Profit Percentage and formula
gross profit/net sales revenue
the ____ method accounts for purchase discounts later when the payment is made and the ___ method accounts for purchase discounts at the time the goods are received
gross, net
gross profit percentage
indicates how much above cost a company sells its products
current assets on the balance sheet available for sale
inventory
which line item would be found on a merchandisers balance sheet and not on a service firms
inventory
2/30, n/60 what does the "60" represent
maximum credit period
if inventory is on the balance sheet under current assists and cost of goods sold is on the income statement then this company is most likely a
merchandiser
a _____ 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
2/30, n/60 what does the "n" represent
net purchases
gross profit (gross margin margin)
net sales less cost of goods sold
gross profit equals
net sales minus cost of goods sold
gross profit percentage is calculated as
net sales minus cost of goods sold, then divide by net sales and multiply by 100
2/30, n/60 what does the "30" represent
number of days in discount period
the ____ cycle is a series of activities that the company undertakes to generate sales and ultimently cash
operating
the _____ inventory system requires that the inventory account be updated only at the end of the accounting period.
periodic
using the _____ inventory system, inventory records are updated only at the end of the accounting period
periodic
under the ____ inventory system the inventory account is updated every time inventory is bought
perpetual
which inventory system requires that the inventory account be updated at the time merchandise is sold
perpetual system
cost of goods sold equals beginning inventory plus ______ minus ending inventory.
purchases
Sales Revenue reports the
sales price times the quantity of goods sold
selling price times the quantity sold
sales revenue
how to find gross profit
sales revenue - cost of goods sold
satellite proportion formula
satellite proportion / (equipment price + satellite price)
FOB shipping point
term of sale indicating that goods are owned by the buyer the moment they leave the sellers premises
shrinkage
the cost of inventory lost to theft fraud and error
goods available for sale
the sum of beginning inventory and purchases for the period
true or false: both the periodic and perpetual systems require a credit to accounts payable when inventory is purchased on account
true
in which of the following ways does a periodic system differ from a perpetual system
-cost of goods sold is not updated until the end of the accoungtin period in a periodic system - inventory is not updated until the end of the accounting period in a periodic system
using a perpetual inventory system the entry to record the return of goods your previously purchased on account includes a ________
-credit to inventory - debit to accounts payable
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 cost of goods sold
which of these will require a credit to the inventory account in a perpetual inventory system?
-selling inventory - selling inventory for cash
place the income statement line items in the proper order from top to bottom
1. sales revenue , gross 2. sales returns, allowances and discounts 3. sales revenue, net 4. cost of goods sold 5. gross profit
service company
A company that sells services rather than physical goods.
Sales Returns and Allowances
a reduction of sales revenues for return of or allowances for unsatisfactory goods
perpetual inventory system
a system in which a detailed inventory record is maintained by recording each purchase and sale of inventory during the accounting period
periodic inventory system
a system in which ending inventory and cost of goods sold are determined only at the end of the accounting period based on a physical count
FOB destination
a term of sale indicating that goods are owned by the seller until they are delivered to the buyer