chapter 6: merchandising operations and multistep income statement
Acme, inc. has cost of goods sold of 2,000. if the beginning inventory was 2,100 and ending inventory was 500, acmes purchases must have been ______
BI + P - EI = CGS 2100+p-500=2000 -> p = 400
using a perpetual inventory system, when a company records a sale of merchandise, it must also record _____
a decrease in its inventory and costs of goods sold, which will be reported on the income statement
purchase transactions affect the
balance sheet and not the income statement
the inventory balance on the balance sheet reports the ______
cost of good available for sale
in a perpetual system, the entry to record the sale of merchandise to a customer on account would include a ______
credit to inventory and debit to cost of goods sold
inventory is reported as
a current asset on the balance sheet
using a perpetual inventory system, the entry to record the return of goods you previously purchased on account includes a ______
debit to accounts payable and credit to inventory
in a perpetual system, the entry to record the sale of merchandise includes a _______
debit to cost of goods sold
the gross profit percentage measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold. this ratio is used for:
making comparisons over time and compare one company to another.
the _______ inventory system requires that the inventory account be updated only at the end of the accounting period.
periodic
which inventory system requires that the inventory account be updated at the time merchandise is sold?
perpetual system
the cost of goods sold equals beginning inventory plan ______ minus ending inventory.
purchases
the journal entry to record the payment for merchandise purchased on account will cause stockholders equity to _____
remain unchanged
the operating cycle is a series of activities that the company undertakes to generate ______ and, ultimately, cash.
revenue
proper order of an income statement
sales revenue sales returns, allowances and discounts net sales cost of goods sold gross profit
what would be considered inventory for a merchandiser?
acquired goods for resale
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 accounts receivable, debit to costs of goods sold, and credit to sales revenue
in a perpetual system, the ________ account is debited when a company purchases merchandise on account
inventory
in a periodic system, the entry to transfer beginning inventory and purchases into cost of goods sold includes a _____
credit to purchases, credit to inventory (beginning balance) and debit to costs of goods sold
what is reported on the income statement?
sales revenue, gross profit and costs of goods sold
XYZ company sold merchandise for 5,000, with payment terms of 2/10, n/30. if the customer pays within the discount period and takes the discount, XYZ will receive ____
5000*.02 = 100 5000-100= 4900
Berkley company had beginning inventory of 4000 and purchases of 20,000. if half of its inventory was sold, Berkley goods available for sale will ______
be split between cost of goods sold and ending inventory
in the periodic system, the end of the period adjustments to transfer beginning inventory into cost of goods sold requires a ______ to cost of goods sold
debit
gross profit percentage is calculated as
net sales - cgs / net sales * 100
in the perpetual inventory system....
the seller should record freight-out as selling expense and the purchaser should record freight-in as an asset, inventory
the journal entry to record the payment within the discount period for goods previously purchased on account causes _____
total assets and liabilities to decrease