Chapter 5 Flashcards Preview

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Flashcards in Chapter 5 Deck (22):
1

What are the two entries for sale of merchandise?

1) Debit:Accounts Receivable
Credit: Sales Revenue


2) Debit: Costs of Goods Sold
Credit: Inventory

2

What are the entries for sales returns and allowances?

1) Debit: Sales Returns and Allowances
Credit: Accounts Receivable

2) Debit:Inventory
Credit:Cost of Goods Sold

3

What are the entries for sales discounts?

Debit: cash and sales discount

Credit: Accounts Receivable

4

What kind of accounts are sales returns and allowances and sales discount?

-contra revenue

+/-

5

Freight-In

Business pays to get merchandise into store

6

Freight-Out

-when business pays to ship to customer
-it is an operating expense

7

FOB Shipping point

-means title transfers at the manufacturer's plant

8

FOB destination

mean title transfer at the buyer's business/store. Seller pays for shipping and buyer does not until its in possession

9

How do we keep track of periodic?

purchase accounts

10

When is the only time to determine cost of goods sold for periodic?

when the count is done

11

What does the count do for perpetual?

verifies the physical asset and gives an estimate of waste,loss, and theft of inventory

12

Write the Formulas......

-for gross profit ratio
-Gross profit plus what gets net sales
-the beginning inventory one
-how to find net sales individually

13

Every sales transaction is supported by what document?

-sales invoice

14

What does a purchaser prepare in relation to the invoice....?

purchase order

15

purchases less what gets you net purchases

-purchase discounts
-purchase returns and allowances

16

net purchases add what gets you cost of goods sold

add freight in

17

net income+ operating expenses =

gross profit

18

sales revenue-cost of goods sold=

gross profit

19

do the inventory account

check chapter 5 notes

20

Explain this 2/10 n30

2% discount
10 day discount period
paid in full in 30 days

21

Do the inventory account?

see handout

22

Name 3 Non-Cash Expenses

-cost of goods sold
-bad debt
depreciation