Accounting 201
What is the increase side of sales revenue?
Credit
What is the formula for the net purchases?
purchases - purchase discounts - purchase returns & allowances + freight in
Sales is what type of account?
Revenue
An expense that the business has incurred but not yet paid (and therefore the transaction has not been recorded)
Accrued Expense
A revenue that has been earned but for which the cash has not been collected yet (and therefore the transaction has not been recorded)
Accrued Revenue
The sum of all depreciation expense recorded to date for an asset
Accumulated depreciation
Perpetual inventory system
An inventory system that keeps a running computerized record of merchandise inventory
Periodic inventory system
An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand
Inventory is what type of account?
Asset
The asset's cost minus accumulated depreciation
Book value (of a plant asset)
Accumulated depreciation is what type of account?
Contra-asset
The cost of the inventory that the business sold to customers
Cost of goods sold
Which of the following accounts would be closed at the end of the year using the perpetual inventory system?
Cost of goods sold
What is the increase side of accumulated depreciation?
Credit
What is the normal balance of accumulated depreciation?
Credit
What is the normal balance of refunds payable?
Credit
What is the normal balance of sales?
Credit
Debts due to be paid with cash or with goods and services within 12 months
Current Liability
Assets that are expected to be converted to cash, sold, or used up during the next 12 months
Current asset
What is the increase side of cost of goods sold?
Debit
What is the increase side of inventory
Debit
What is the normal balance of cost of goods sold?
Debit
What is the normal balance of estimated returns inventory?
Debit
What is the normal balance of inventory?
Debit
The allocation of a plant asset's cost over its useful life
Depreciation
You sold inventory, but the inventory was not "as ordered". The buyer sends the inventory back to you. What account do you credit when the product is returned to your inventory?
Estimated Returns inventory
Gross profit
Excess of net sales revenue over cost of goods sold
Cost of goods sold is what type of account?
Expense
Operating expenses
Expenses, other than cost of goods sold, that are incurred in the entity's major ongoing operations
Sales revenue minus cost of goods sold
Gross profit
What is the order of the subtotals that appear on a multi-step income statement?
Gross profit, operating income, total other income and expenses, net income
A temporary "holding tank" account into which revenues and expenses are transferred prior to their final transfer to the Capital account
Income summary
All the goods that the company owns and experts to sell to customers in the normal course of operations
Inventory
What is the formula for the gross profit
Net sales revenue - cost of goods sold
Accounts that are not closed at the end of the period (assets, liabilities, and the capital account)
Permanent accounts
Long-lived tangible assets (such as land, buildings & equipment) use in the operation of a business. Also known as "property, plant & equipment", and "fixed assets"
Plant asset
You purchased inventory, but the inventory is not "as ordered". The seller reduces your bill as an incentive for you to keep the goods
Purchase allowance
You purchased inventory, but the inventory is not "as ordered" You give the inventory back to the seller
Purchase return
The amount that a merchandiser earns from selling its inventory
Sales Revenue
You sold inventory but the product was not "as ordered" by your customer. You reduce the amount that you will charge the customer as an incentive for the customer to keep the goods
Sales allowance
You sold inventory on account. The customer pays after the discount period, so you adjust which revenue on account
Sales discount forfeited
Consists of drawing, revenue, and expense accounts related to a particular accounting period. These accounts are closed at the end of that period
Temporary accounts
Cost of goods sold
The cost of merchandise inventory that the business has sold to customers
Vendor
The individual or business from whom a company purchases goods
The individual or business from whom a company purchases goods. A merchandising company mainly purchases inventory from these individuals/ businesses
Vendor
A internal tool used to calculate adjusting entries. Also used to help create financial statements. Contains columns for trial balance, adjustments, adjusted trial balance, income statement, and balance sheet
Worksheet
