Accounting Ch 5

33 cards

Final Exam


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Created Feb 21, 2012
by ginababiash

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	Side A	Side B
1	merchandiser	entity that earns net income by buying & selling merchandise
2	wholesaler	intermediary that buys products from manufacturers or other wholesalers and sells them to retailers...
3	retailer	intermediary that buys products from manufacturers or wholesalers and sells them to consumers
4	cost of goods sold (sales)	cost of inventory sold to customers during a period; also called cost of sales
5	net income for merchandiser=	net sales- cost of goods sold = gross profit- expenses
6	merchandise inventory	goods that a company owns and expects to sell to customers (aka simple inventory)-current...
7	inventory	· goods a company owns and expects to...
8	perpetual inventory system	method that maintains continuous records of the cost of inventory available and the cost...
9	periodic inventory system	updates the accounting records for merchandise transactions only at the end of the period
10	credit terms	description of the amounts and timing of payments that a buyer (debtor) agrees to make in the...
11	credit period	time period that can pass before a customer’s payment is due
12	cash discount	reduction in the price of merchandise granted by a seller to a buyer when payment is made within...
13	discount period	time period which a cash discount is available and the buyer can make a reduced paymentex:...
14	purchase discount	term used by a purchaser to describe a cash discount granted to the purchaser for paying...
15	sales discount	term used by a seller to describe a cash discount granted to buyers who pay within the discount...
16	purchase allowance	reduction in the cost of defective or unacceptable merchandise that a buyer acquires
17	debit memorandum	notification that the sender has debited the recipient’s account in the sender’s records o The...
18	FOB	(free on board)the point when ownership of goods passes to the buyer
19	FOB shipping point	buyer pays shipping costs and accepts ownership of goods when the sellers transfers goods...
20	FOB destination	seller pays shipping costs & buyer accepts ownership of goods at the buyer’s place of...
21	supplementary records	information outside the usual accounting records
22	each sales transaction for a seller of merchandise includes:	1) Revenue received in the form of an asset from the customer 2) Recognition...
23	credit memorandum	notification that the sender has credited the recipient’s account in the sender’s records
24	shrinkage	inventory losses that occur as a result of theft or deterioration o Physical...
25	multiple step income statement	· income statement format that shows...
26	Operating expenses are classified into two sections:	-selling expenses-general & administrative expenses
27	selling expenses	plan that lists the types and amounts of selling expenses (promoting sales by displaying...
28	general & administrative expenses	expenses that support the operating activities of a business (expenses related to accounting,...
29	single step income statement	income statement format that includes costs of goods sold as an expense & shows only...
30	acid test ratio=	quick assetscurrent liabilitiesquick assets include: cash & cash equivalents, short-term...
31	gross margin ratio =	net sales - cost of goods sold net sales
32	list price	catalog price of an item before any trade discount is deducted
33	trade discount	reduction from a list or catalog price