Accounting exam 2 flashcards

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Author:
Gibbymn
ID:
11982
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Accounting exam 2 flashcards
Updated:
2010-03-25 13:53:41
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Chapter 6
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Prep for exam 2
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  1. Merchandising co. Operating cycle
    • 1. Purchase murchandise
    • 2. Sale of merch on account
    • 3. Collect cash for AR
  2. Retailers
    Sell merch directly to the public.
  3. Wholesalers
    They buy merch from manufacturers and sell to retailers.
  4. Income statement of a merchandising company
    Revenue-COGS-expenses= net income
  5. Gross profit = ?
    = sales - COGS

    Or Net sales - COGS
  6. COGS is ?
    An expense of goods sold to customers.
  7. Gross profit % =
    Or
    Gross profit % margin=
    = gross profit / revenue

    = gross profit / net sales
  8. Subsidiary ledgers show ?
    Details about individual items in the general ledger.
  9. In a Perpetual inventory system ?
    The inventory account is continuously updated to show items on hand.
  10. Journal entry for inventory shrinkage
    • Dr. COGS. XXX
    • Cr. Inventory. XXX

    This reduces the inventory on record.
  11. 2/10, n/30 means ?
    2% discount if paid in 10 days, otherwise the full amount is due in 30 days.
  12. Purchases on the gross method are recorded at ?
    AP always at 100%
  13. Journal entry within discount, on gross method
    • Dr. AP
    • Cr. Cash
    • Cr. Purchase discount taken
  14. Purchases under the net method are recorded ?
    AP is always recorded at Net% of invoice. (the $ paid, discount or not)
  15. Journal entry w/ disscount on Net method
    • Dr. AP. ($ paid)
    • Cr. Cash. ($ paid)
  16. Purchase w/out discount under net method
    • Dr. AP
    • Dr. Purchase discount lost
    • Cr. Cash
  17. "Sales returns and allowances" & "sales discounts" are what accounts ?
    • Contra-revenue accounts
    • (norm balance-- debit)
  18. Sales need how many entries?
    TWO!!, one to record sales and one to record COGS

    • Dr. AR. XXX
    • Cr. Sales. XXX

    • Dr. COGS. XXX
    • Cr. Inventory. XXX
  19. Sales discount need how many journal entries?
    ONE

    • Dr. Cash. XX
    • Dr. Sales discount XX
    • Cr. AR. XX
  20. Sales returns need how many journal entries?
    TWO

    • Dr. Sales return & allow
    • Cr. AR

    • Dr. Inventory
    • Cr. COGS
  21. Transportation cost needs how many journal entries?
    ONE

    • Dr. Delivery expense
    • Cr. Cash
  22. COGS = ?
    (using inventory)
    • = beginning inventory
    • + purchases
    • - ending inventory

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