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