The flashcards below were created by user
tvr0227
on FreezingBlue Flashcards.
-
Net Sales-COGS=GP-Exp= ??
Net Income
-
Merchandise Inventory
Asset on balance sheet
-
Beg. Inv. + Net purchases = ??
Cost of Goods Available for Sale (COGAS)
-
COGAS - EI = ??
COGS
(EI=COGAS-COGS)
-
buy and sell merchandise (wholesale, retail)
merchandiser
-
buy from manufacturer, sell to retailer
wholesaler
-
buy from manufacturer, sell to consumer
retailer
-
net sales - COGS =
GP or (gross margin)
-
Merchandise sole is an ______ on the ______
expense, BS
-
FOB shipping
buyer pays
(ownership xfer at departure from dock)
-
FOB destination
shipper pays
(ownership xfer at arrival of delivery)
-
transportation out, delivery expense
transportation costs
-
sales discount, sales return are both
contra revenue
-
loss of inventory
shrinkage
-
quick assets / current liabilities
acid test ratio
-
cash, short term investments, current receivables
quick asset
-
net sales-COGS/net sales
gross margin ratio
(GP/net sales)
-
Consignment:
owner
consignor
-
Consignment:
sells
consignee
-
sales price - cost of making sale
net realizable value (NRV)
-
Effects on financial statement:
FIFO ↓COGS
↓COGS,↑GP and ↑NI
↑COGS, ↓GP and ↓NI
-
Effects on financial statement:
LIFO ↑COGS
↑COGS, ↓GP and ↓NI
↓COGS, ↑GP and ↑NI
-
If used for tax purposes, IRS requires use in financial statements:
LIFO conformity rule
-
inventory must be reported at market value when market is lower than cost (if market is lower, loss reported in COGS and inventory balance)
lower of cost and market (LCM)
-
Effects on inventory errors:
EI ↑
EI ↑ then COGS ↓ and NI↑
EI ↓ then COGS ↑ and NI ↓
-
COGS / avg inventory
inventory turnover
-
(BI + EI)/2
avg inventory
-
(EI/COGS)*365
days sales in inventory
-
-
FIFO > WA >LIFO
WA is always between FIFO and LIFO
-
SOX requires companies to document and test internal controls and requires auditors to test the controls
Section 404
-
reduces processing errors
limits evidence of processing
increases e-commerce
makes seperation of duties more difficult
allows more extensive testing of records
technology and ICP
-
human error vs. human fraud
limitations of ICP
- error = accident
- fraud = intentional
-
opportunity, pressure, rationalization
fraud triangle
-
should be seperate from recordkeeping
cash receipts promptly deposited
disbursements made by check
controls of cash
-
currency, coins, amt of deposits in bank accts, checking acct, savings acct, checks, cashier's checks, certified checks, money orders
cash equivalents
-
1. plan cash receipts to meet cash payments when due
2. keep minimum level of cash necessary to operate
cash management principles
-
1. bank acct
2. signature cards
3. deposit tickets
4. checks
banking controls
-
JE required only when adjusting the book balances, not bank statement
journal entry requirement
-
check written by depositor that has not been rec'd by the bank
outstanding check
-
deposit made and recorded by depositor, but not yet recorded on bank statement
deposit in transit
-
-
As purchasing prices rise:
- 1. FIFO pays higher taxes
- 2. FIFO has lower COGS
- 3. FIFO has higher GP and NI
-
prescribes that notes to the financial statements describe the changes, its justification, and its effect on income
full disclosure statement
-
Buyer:
purchase on credit
- Dr Inventory XXX
- Cr AP XXX
-
Buyer:
pay within discount period
- Dr AP XXX
- Cr Inv XXX
- Cr Cash XXX
-
Buyer:
pay after discount period
-
Buyer:
pay shipping charges
- Dr. Inventory XXX
- Cr. Cash XXX
-
Buyer:
receive a credit memo for damaged inv.
- Dr. AP XXX
- Cr. Inventory XXX
-
Seller:
sell inventory on credit
- Dr. COGS XXX
- Cr. Inventory XXX
-
Seller:
receive payment within discount period
- Dr. Cash XXX
- Dr. Sales Dis. XXX
- Cr. AR XXX
-
Seller:
receive payment outside discount period
-
Seller:
customer returns merchandise
- Dr. Sales Return and Allow. XXX
- Cr. AR XXX
- Dr. Inventory XXX
- Cr. COGS XXX
-
Seller:
issue a credit memo-damaged merchandise
- Dr. Sales Ret and Allow XXX
- Cr. AR XXX
-
Seller:
pay for shipping charges
- Dr. Shipping Exp XXX
- Cr. Cash XXX
-
Seller:
JE for shrinkage
- Dr. COGS XXX
- Cr. Inventory XXX
|
|