Unit V Flashcards Chapters 5 and 6

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

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

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

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. MARK FOR REVIEW SHOW NEXT

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. MARK FOR REVIEW SHOW NEXT

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

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

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. MARK FOR REVIEW SHOW NEXT

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

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

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

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. MARK FOR REVIEW SHOW NEXT

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

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. MARK FOR REVIEW SHOW NEXT

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. MARK FOR REVIEW SHOW NEXT

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

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

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. MARK FOR REVIEW SHOW NEXT

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

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

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

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. MARK FOR REVIEW SHOW NEXT

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. MARK FOR REVIEW SHOW NEXT

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. END REVIEW