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17 Cards in this Set
- Front
- Back
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Freight Out
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When a company pays the shipping cost to deliver products to a customer. debit delivery exp credit cash
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Freight In
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paying trucker for bringing inventory. debit inventory credit cash
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Perpetual Inventory System
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Shows number of units and cost. updated every time an item is bought sold or returned
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Periodic Inventory System
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Updates inventory record at the end of accounting period, a physical count of inventory is used
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FOB Shipping point
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When goods leave the sellers department purchaser pays for shipping
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FOB Destination
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When the goods reach the customer at destination point. seller pays for shipping
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Lower of Coster Market Rule (LCM)
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the amount originally recorded for inventory must be written down to its lower market value
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Inventory Turnover Ratio
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Tells us the number of times inventory turns over during period. higher ratio = faster turnover
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Days to sell inventory
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avg number of days from purchase to sale of inventory. higher number= longer time to sell
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gross profit method equation
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(100%-gross profit percentage) x net sales= COGS
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Internal Controls
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methods used by organizations to protect assets, provide reliable info, efficient operations and compliance with laws
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5 Common Control Principles
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Est. Responsibility, Segregation of duties, restrict access, document procedures, independent verify
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Est Responsibility
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Assign task to only one employee
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Segregate duties
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Do not make one employee responsible for all parts of a transaction
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Restrict access
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dont provide access to assets or info unless needed to fulfill duty
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Document procedures
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prepare documents to show activities have occured ex numbered checks
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independent verify
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check other works ex managers..accountants
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