Chapters 5 and 6 Unit V Flashcards

Expenses incurred that are not related to marketing the company’s goods and services. Administrative expenses #1 SHOWNEXT MARK FOR REVIEW Review

The cost of the merchandise inventory that the business has sold to customers. Cost of Good Sold (COGS) #2 SHOWNEXT MARK FOR REVIEW Review

The payment terms of purchase or sale as stated on the invoice. Credit terms #3 SHOWNEXT MARK FOR REVIEW Review

Situation in which the buyer takes ownership (title) to the goods at the delivery destination point and the seller typically pays the freight. FOB destination #4 SHOWNEXT MARK FOR REVIEW Review

Situation in which the buyer takes ownership (title) to the goods after the goods leave the seller’s place of business (shipping point) and the buyer typically pays the freight. FOB shipping point #5 SHOWNEXT MARK FOR REVIEW Review

Excess of net Sales Revenue over Cost of Goods Sold. Gross profit #6 SHOWNEXT MARK FOR REVIEW Review

Measures the profitability of each sales dollar above the cost of goods sold. Gross profit / Net sales revenue. Gross profit percentage #7 SHOWNEXT MARK FOR REVIEW Review

The loss of inventory that occurs because of theft, damage, and errors. Inventory shrinkage #8 SHOWNEXT MARK FOR REVIEW Review

A seller’s request for payment from the purchaser. Invoice #9 SHOWNEXT MARK FOR REVIEW Review

The merchandise that a business sells to customers. Merchandise inventory #10 SHOWNEXT MARK FOR REVIEW Review

A business that sells merchandise or goods to customers. Merchandiser #11 SHOWNEXT MARK FOR REVIEW Review

A type of merchandiser that buys merchandise either from a manufacturer or a wholesaler and then sells those goods to consumers. Retailer #12 SHOWNEXT MARK FOR REVIEW Review

A type of merchandiser that buys goods from manufacturers and then sells them to retailers. Wholesaler #13 SHOWNEXT MARK FOR REVIEW Review

Income statement format that contains subtotals to highlight significant relationships. In addition to net income, it reports gross profit and operating income. Multi-step income statement #14 SHOWNEXT MARK FOR REVIEW Review

The amount a company has earned on sales of merchandise inventory after returns, allowances, and discounts have been taken out. Sales Revenue less Sales Returns and Allowances and Sales Discounts. Net sale revenue #15 SHOWNEXT MARK FOR REVIEW Review

Expenses, other than Cost of Goods Sold, that are incurred in the entity’s major ongoing operations. Operating expenses #16 SHOWNEXT MARK FOR REVIEW Review

Measures the results of the entity’s major ongoing activities. Gross profit minus operating expenses. Operating income #17 SHOWNEXT MARK FOR REVIEW Review

An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand. Periodic inventory system #18 SHOWNEXT MARK FOR REVIEW Review

An inventory system that keeps a running computerized record of merchandise inventory. Perpetual inventory system #19 SHOWNEXT MARK FOR REVIEW Review

A business should use the same accounting methods and procedures from period to period. Consistency principle #20 SHOWNEXT MARK FOR REVIEW Review

A business’s financial statements must report enough information for outsiders to make knowledgeable decisions about the company. Disclosure principle #21 SHOWNEXT MARK FOR REVIEW Review

An inventory costing method in which the first costs into inventory are the first costs out to cost of goods sold. Ending inventory is based on the costs of the most recent purchases. First-in, First-out (FIFO) method #22 SHOWNEXT MARK FOR REVIEW Review

An inventory costing method in which the last costs into inventory are the first costs out to cost of goods sold. The method leaves the oldest costs- those of beginning inventory and the earliest purchases of the period- in ending inventory. Last-in, First-out (LIFO) method #23 SHOWNEXT MARK FOR REVIEW Review

Reference Miller-Nobles, T., Mattison, B., & Matsumura, E. M. (2016). Horngren’s accounting (11th ed.). Upper Saddle River, NJ: Pearson. REVIEWEND