1. Unit V Flashcards
Chapters 5 and 6

2. Administrative expenses#1
Administrative expenses
Review
Expenses incurred that are not
related to marketing the company’s
goods and services.
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3. Cost of Good Sold (COGS)#2
Review
The cost of the merchandise
inventory that the business has sold
to customers.
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4. Credit terms Review #3 SHOW NEXT The payment terms of purchase or
sale as stated on the invoice.
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5. FOB destination Review #4 SHOW NEXT Situation in which the buyer takes
ownership (title) to the goods at the
delivery destination point and the
seller typically pays the freight.
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6. FOB shipping point Review #5 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.
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7. Excess of net Sales Revenue over
Gross profit #6
Review
Excess of net Sales Revenue over
Cost of Goods Sold.
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8. Gross profit percentage#7
Review
Measures the profitability of each
sales dollar above the cost of
goods sold. Gross profit / Net sales
revenue.
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9. Review The loss of inventory that occurs because of theft, damage, and#8
Inventory shrinkage
Review
The loss of inventory that occurs
because of theft, damage, and
errors.
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10. A seller’s request for payment#9
Invoice
Review
A seller’s request for payment
from the purchaser.
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11. Merchandise inventory
#10
Merchandise inventory
Review
The merchandise that a business
sells to customers.
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12. A business that sells merchandise
#11
Merchandiser
Review
A business that sells merchandise
or goods to customers.
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13. Review #12 Retailer SHOW NEXT A type of merchandiser that
buys merchandise either from
a manufacturer or a wholesaler
and then sells those goods to
consumers.
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14. Review #13 Wholesaler SHOW NEXT A type of merchandiser that buys
goods from manufacturers and then
sells them to retailers.
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15. Multi-step income statement
#14
Multi-step income statement
Review
Income statement format that
contains subtotals to highlight
significant relationships. In addition
to net income, it reports gross profit
and operating income.
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16. Review #15 Net sale revenue SHOW NEXT MARK FOR 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.
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17. Review #16 Operating expenses SHOW NEXT
Expenses, other than Cost of Goods
Sold, that are incurred in the entity’s
major ongoing operations.
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18. Review #17 Operating income SHOW NEXT
Measures the results of the entity’s
major ongoing activities. Gross
profit minus operating expenses.
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19. Periodic inventory system
#18
Periodic inventory system
Review
An inventory system that requires
businesses to obtain a physical
count of inventory to determine
quantities on hand.
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20. Perpetual inventory system
#19
Perpetual inventory system
Review
An inventory system that keeps a
running computerized record of
merchandise inventory.
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21. Consistency principle
#20
Consistency principle
Review
A business should use the same accounting methods and procedures from period to period.
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22. Review #21 Disclosure principle SHOW NEXT
A business’s financial statements must report enough information for outsiders to make knowledgeable decisions about the company.
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23. First-in, First-out (FIFO) method
#22
First-in, First-out (FIFO) method
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.
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24. Last-in, First-out (LIFO) method
#23
Last-in, First-out (LIFO) method
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.
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25. Reference Miller-Nobles, T. , Mattison, B. , & Matsumura, E. M. (2016)
Reference Miller-Nobles, T., Mattison, B., & Matsumura, E. M. (2016). Horngren’s accounting (11th ed.). Upper Saddle River, NJ: Pearson.
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