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