Exam 2

Two categories of expenses in merchandising
companies are

sales revenue less cost of goods sold is called

after gross profit is calculated operating expenses are deducted to determine

gross profit - what = net income

what - cost of goods sold - operating expenses = net income

begining inv + cost of goods purchased - ending inv = what

inventory turn over = cost of goods sold / by what

cost of goods avail for sale - net sales = what

net sales - gross profit = what

cost of goods avail for sale - cost of goods sold = what

gross profit / net sales = what

net sales = sales - what

net income = gross profit - what

sales - sales discounts = what

purchases - purchase returns - purchase discounts + freight in = what

begining inv + cost of goods purchased - ending invt = what

net sales - cost of goods sold = what

gross profit - operating expenses = what

ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller

ownership of the goods remains with the seller untill the goods reach the buyer

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

understating begining inv will cause COGS to be what and net income to be what

overstating begin inv will cause COGS to be what and net income to be what

understate ending inv will cause COGS to be what and NI to be what

overstating ending inv will cause COGS and NI to be what

an overstated err in ending inv will cause assets to be WHAT and SE to be WHAT

Cost of goods sold / avg inventory = what

states that only transaction data that can b expressed in terms of money be included in the accounting records

states that the activities of the entity be kep separate and distinct from the activities of the owner and of all other economic entities

states that the economic life of a business can be divided into artificial time periods

assumes that the company will contiune in operation long enough to caarry out is existing objectives

dictates that companies should recoginize revenue in the accounting period in which it is earned

dictates that companies match expenses with revenues in the period in which efforts are made to generate those revenues

requires that companies disclose circumstances and events that make a
difference to financial statement users

dictates that companies record assets at their cost

relates to an items impact on a firms overall financial condition and operations