Accounting Chapter 6

Front 1

Inventory

Back 1

Merchandise intended for resale to customers

Front 2

Operating Cycle

Back 2

The repeating sequence of transactions by which a business generates its revenue and cash receipts from customers.

Front 3

Gross Profit

Back 3

Net sale revenue minus the cost of goods sold

Front 4

Control Account

Back 4

A general ledger account that summarizes the content of a specified subsidiary ledger

Front 5

Subsidiary Ledger

Back 5

A ledger containing separate accounts for each of the items making up the balance of a control account in the general ledger. The total of the account balances in a subsidiary ledger are equal to the balance in the general ledger control account.

Front 6

Perpetual Inventory System

Back 6

A system of accounting for merchandising transactions in which the inventory and Cost of Goods Sold accounts are kept perpetually up to date

Front 7

Inventory Shrinkage

Back 7

The loss of merchandise through such causes as shoplifting, breakage, and spoilage.

Front 8

Periodic Inventory System

Back 8

Eliminates the need for recording the cost of goods sold as sales occur. However, the amounts of inventory and the costs of goods sold are not known until a complete inventory is taken at years-end.

Front 9

Net Sales

Back 9

Total sales revenue less sales returns and allowances and sales discounts.

Front 10

Contra-revenue Account

Back 10

A debit balance account that is offset against revenue in the income statement.

Front 11

Comparable Store Sales

Back 11

A comparison of store figures at established stores with existing "track records."