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Exam 2
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Two categories of expenses in merchandising
companies are
cost of goods sold and operating expeneses
sales revenue less cost of goods sold is called
gross profit
after gross profit is calculated operating expenses are deducted to determine
net income
gross profit - what = net income
operating expenses
what - cost of goods sold - operating expenses = net income
sales
begining inv + cost of goods purchased - ending inv = what
cost of goods sold
inventory turn over = cost of goods sold / by what
avg inventory
cost of goods avail for sale - net sales = what
ending inventory
net sales - gross profit = what
cost of goods sold
cost of goods avail for sale - cost of goods sold = what
ending inventory
gross profit / net sales = what
gross profit rate
net sales = sales - what
(SR&A + Sales discount)
net income = gross profit - what
operating expenses
sales - sales discounts = what
net sales
purchases - purchase returns - purchase discounts + freight in = what
cost of goods purchased
begining inv + cost of goods purchased - ending invt = what
cost of goods sold
net sales - cost of goods sold = what
gross profit
gross profit - operating expenses = what
net income
ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller
FOB shipping point
ownership of the goods remains with the seller untill the goods reach the buyer
FOB desintiation
if the seller pays the freight the goods are:
??????????
if the buyer pays the freight the goods are:
?????????
cost of goods avail for sale / total units avail for sale = what
weighted avg unit cost
understating begining inv will cause COGS to be what and net income to be what
Under and over
overstating begin inv will cause COGS to be what and net income to be what
over and understated
understate ending inv will cause COGS to be what and NI to be what
Over and under
overstating ending inv will cause COGS and NI to be what
Under and over
an overstated err in ending inv will cause assets to be WHAT and SE to be WHAT
Overstated and Overstated
Cost of goods sold / avg inventory = what
inventory turnover
states that only transaction data that can b expressed in terms of money be included in the accounting records
monetary unit assumption
states that the activities of the entity be kep separate and distinct from the activities of the owner and of all other economic entities
Economic entity assumtpion
states that the economic life of a business can be divided into artificial time periods
time period assumption
assumes that the company will contiune in operation long enough to caarry out is existing objectives
going concern assumption
dictates that companies should recoginize revenue in the accounting period in which it is earned
revenue recognition principal
dictates that companies match expenses with revenues in the period in which efforts are made to generate those revenues
matching principal
requires that companies disclose circumstances and events that make a
difference to financial statement users
full disclosure
dictates that companies record assets at their cost
cost principal
relates to an items impact on a firms overall financial condition and operations
materiality
Author
philflrs
ID
24355
Card Set
Exam 2
Description
Review for exam 2
Updated
2010-06-21T05:02:04Z
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