Acctg-4A: Chapter 4

Front 1

Merchandise

Back 1

Consist of products also called Goods in a company buys to resell to customer

Front 2

Merchandiser

Back 2

Burns net income by buying and selling merchandise merchandisers are often wholesalers or retailers

Front 3

Wholesaler

Back 3

Buys products from manufacturers and sells them to retailers

Front 4

Retailers

Back 4

Wise products from manufacturers or wholesalers and sells them to customer

Front 5

Cost of goods sold

Back 5

Revenue from selling merchandise is sales in the term used for expense of buying and preparing the merchandise is cost of goods sold

Front 6

Gross profit also called gross margin

Back 6

Equals net sales less the cost of goods sold

Front 7

Merchandise inventory or simply inventory

Back 7

The first you products they company owns and intends to sell the cost of his ass that includes the costs incurred to buy the Goods ship them to a store and make them ready for sale

Front 8

Operating cycle for a merchandiser

Back 8

Merchandising companies operating cycle Begins by purchasing merchandise and ends by collecting cash from selling the merchandise The Links of times vary depending on the company a grocery store will have more operating Cycles in a clothing department the cycle moves from cash purchases of merchandise to inventory for sales to credit card sales to accounts receivable to cash

Front 9

Perpetual inventory system

Back 9

Sounds great right updates accounting records for each purchase and sale of inventory

Front 10

Periodic inventory system

Back 10

Updates accounting records for purchases and sales of inventory only at the end of a period

Front 11

Trade discounts

Back 11

What a manufacturer wholesaler prepares a catalog of items it has for sale it usually gives each items a list price also called a catalog price however and items intended selling price equals list price minus given percent called a trade discount this price usually depends on if the buyer is a wholesaler retailer or final customer

Front 12

Credit terms

Back 12

A purchase include the amounts and timing of payments from a buyer to a seller

Front 13

EOM

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End of the month the equation for end of the month will change whether the credit card payment is due 10 days after the end of the month or in terms of 30 days

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Credit period

Back 14

The amount of time allowed before full payment is due

Front 15

Cash discount

Back 15

Are you were just sellers can grant a cash discount to encourage buyers to pay earlier a buyer views a cash discount as a purchases discount the seller views a cash discount as a sales discount this reduce payment applies only for the discount.

Front 16

F o b free on board

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Determines who pays Transportation costs and other costs of Transit such as insurance whoever owns the goods in transit pays of shipping cost

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Supplementary records

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Also called supplemental records referred to information outside the usual general ledger accounts

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New Revenue recognition rules

Back 18

Require that sellers report sales net of expected sales discounts

Front 19

Gross method

Back 19

I saw you think record sales at the gross amount and record sales discounts if and when they're taken

Front 20

Sales discounts

Back 20

Does a contra revenue account meaning the sales discount account is deducted from the sales account when Computing a company's net sales the sales debit account has a normal debit balance because it decrease the cells which has a normal credit balance

Front 21

Returns received by seller

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Sellers issue refund for return Goods when returns occur the seller debit sales returns and allowances a contra revenue account to sales

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Shrinkage

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The loss of inventory and it's computed by comparing a physical count of inventory with recorded amounts

Front 23

Learn more from the partnership. Ending adjusting entries are commonly made for

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Expected sales discounts expected returns and allowances Revenue side and expected returns and allowances cost side these three adjustments produce three new accounts allowance for sales discounts allowance refund payable inventory returns estimated

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You should temporary accounts unique to merchandisers

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Sales of goods, sales discounts, sales returns and allowances, and cost of goods sold

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Multiple step income statement

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Shows detailed computations of net sales and other costs and expenses and report subtotals for various classes of items

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Selling expenses

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Include the expenses of advertising merchandise making sales and delivering Goods to customers

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General and administrative expenses

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Support a company's overall operations and include expense related to accounting, human resource management, and financial management. If Spencer's are allocated between sections when they contribute to more than one

Front 28

Non-operating activities

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Consist of other expenses revenue losses and gains that are unrelated to a company's operations

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Other revenues and gains commonly include

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Interest Revenue dividend revenue revenue and gains from asset disposals

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Other expenses and losses commonly include

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Interest expense Los from asset disposals and Casualty losses

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Acid test ratio

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Acid test ratio equals cash and payment equivalents + short-term Investments + current receivables divided by current liabilities

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Acid test ratio

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Also called quick ratio is defined as quick as it divided by current liabilities

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Gross margin ratio

Back 33

Also called gross profit ratio is defined as gross margin which is net sales Minus cost of goods sold divided by net sales

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Gross margin ratio

Back 34

Net sales Minus cost of goods sold divided by net sales