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30 Cards in this Set
- Front
- Back
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Normal balance of the following account: Cost of merchandise sold |
Debit |
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Normal balance of the following account: Customer refunds payable |
Credit
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Normal balance of the following account: Delivery Expense |
Debit
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Normal balance of the following account: Estimated Returns Inventory |
Debit
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Normal balance of the following account: Merchandise Inventory |
Debit
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Normal balance of the following account: Sales |
Credit
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Normal balance of the following account: Sales Tax Payable |
Credit |
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The process by which a company spends cash, generates revenue, and receives cash either at the time the revenues are generated or later by collecting an accounts receivable... |
operating cycle |
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The operating cycle of a service and merchandising business differs in that.. |
merchandising businesses must purchase merchandise for sale to customers. |
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A merchandising business first purchases merchandise to sell to its customers. When this merchandise is sold, the revenue is reported as _______, and its cost as recognized as an expense called _______________. |
sales; cost of merchandise sold |
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The _____________ is subtracted from ____________ to arrive at gross profit. |
cost of merchandise sold; sales |
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The cost of merchandise sold is subtracted from sales to arrive at.... |
gross profit |
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Gross profit is the profit before... |
deducting operating expenses. |
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The profit before deducting operating expenses is... |
gross profit |
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Merchandise on hand (not sold) at the end of an accounting period is called... |
merchandise inventory. |
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Merchandise inventory is reported as what on the balance sheet... |
current asset |
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During the current year, merchandise is sold for $250,000 cash and for $975,000 on account. The cost of the merchandise sold is $735,000. What is the amount of gross profit? |
$490,000 |
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The terms of purchases on account are normally indicated on the _________ or bill that the seller sends the buyer. |
invoice |
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The terms for when payments for merchandise are to be made are called... |
credit terms |
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If payment for merchandise is required on delivery, the terms are.... |
cash or net cash |
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If the buyer is allowed an amount of time in which to pay, this period is known as |
credit period |
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The credit period usually begins... |
with the dale of the sale (as shown on the invoice) |
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If payment is due within 30 days after the invoice date, the terms are ___________ written as _______. |
net 30 days; n/30 |
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If payment is due by the end of the month in which the sale was made, the terms are written as... |
n/eom |
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To encourage the buyer to pay before the end of the credit period, the seller may temporarily reduce the cost of purchase or offer a... |
purchase discount. |
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A seller may offer a 2% discount if the buyer pays within 10 days of the invoice date. If the buyer doesn't take the discount, the total invoice amount is still due within 30 days. These terms are ___________________ written as _____________. |
2% discount if paid within 10 days, net amount due within 30 days 2/10, n/30 |
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Rofles Company purchased merchandise on account from a supplier for $11,500, terms 2/10, n/30. Rofles Company later returned $2500 of the merchandise for full credit. If they pay the invoice within the discount period, what is the amount of cash required? |
$8,820 |
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Under a perpetual inventory system, if a company purchases merchandise and later returns a portion of the merchandise for full credit, what accounts will be debited and credited to record the return? |
Accounts Payable is debited and Merchandise Inventory is credited.
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A supplier sells $1500 merchandise on account to another company. How is this transaction journalized by the seller? |
Accounts Receivable- -------------------$1500 ------Sales----------------------------------------------$1500 Cost of merchandise sold ------------$1500 ------Merchandise Inventory-------------------$1500 |
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A company purchases $2500 merchandise on account from James company. How is this transaction journalized by the buyer? |
Merchandise Inventory------------------$2500 ------Accounts Payable-James Co.--------------$2500 |
