Ch. 5 Accounting

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Author:
Anonymous
ID:
106879
Filename:
Ch. 5 Accounting
Updated:
2011-10-06 10:11:42
Tags:
accounting
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study
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  1. merchandising operations
    physical / tangible goods
  2. purchase transactions
    (perpetual system only)
    • point of view = retailer acquiring inventory to sell
    • we are the buyers

    • entry:
    • inventory X
    • ---->cash or A/P X
  3. sales transactions
    (perpetual system only)
    • point of view = retailer (seller) may offer buyer (customer) discount to encourage payment sooner, rather than at end of credit period
    • we are the sellers

    • entry:
    • A/R X
    • ---->sales X
    • COGS X
    • ---->inventory X
  4. purchase transactions (perpetual system only)
    point of view
    • retailer acquiring inventory to sell
    • we are the buyers
  5. sales transactions (perpetual system only)
    point of view
    • retailer (seller) may offer buyer (customer) discount to encourage payment sooner, rather than at end of credit period
    • we are the sellers
  6. purchase transactions
    entry
    • entry:
    • inventory X
    • ---->cash or A/P X
  7. sales transactions
    entry
    • entry:
    • A/R X
    • ---->sales X

    • COGS X
    • ---->inventory X
  8. mechandising inventory
    includes all costs to get goods on retailer's shelf to sell

    ex: raw cost, insurace, shipping
  9. F.O.B Shipping point
    (free on board)
    • buyer (us) owns goods moment they're shipped
    • pays for shipping
  10. F.O.B. Selling point
    (free on board)
    • seller (manufacturer) still owns goods during shipment
    • pays for goods to be shipped (we record nothing)
  11. purchase discounts
    manufacture (seller) may offer buyer a discount to encourage payment sooner, rather than at end of a credit period
  12. E.O.M.
    end of month
  13. 2/10, net/30
    buyer gets a 2% discount if pay within 10 days, otherwise, entire amount is due in 30 days
  14. what type of entry is used for return merchandise?
    reversing entry

    • entry:
    • A/P X
    • ---->inventory X
  15. allowance
    • deducted BEFORE figuring discount
    • keep the good, get discount
  16. return
    • deducted BEFORE figuring discount
    • physically send goods back
  17. what does discount reduce?
    inventory

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