acct 201 test 2

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acct 201 test 2
2011-02-23 17:57:17

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  1. Operating Cycle of Merchandising company
  2. Perpetual inventory System
    • Inventory balance and COGS is always updated
    • Journal Entries are reguired upon sale of goods
    • Improved inventory Control
    • Facilitated by bar code system
    • high cost to maintain
  3. Periodic inventory system
    • Inventory balance is updated at the end of the period
    • COGS is recorded at the end of the period
    • journal entries are required upon the end of the period
    • smaller companies
    • low-cost inventory
  4. Multiple step income statement
    A form of income statement that contains several sections, subsections and subtotals
  5. Sales
    the total amount charged to customers for merchandise sold, including cash sales and sales on account
  6. Sales returns and allowences
    are granted by the seller to customers for damaged or defective merchandise

    contra revenue
  7. Sales discounts
    granted by the seller to customers for early payment of amounts owed

    contra revenue
  8. Net income
    determined by subtracting sales returns and allowances and sales discounts from sales
  9. merchandise available for sale
    The cost of merchandise available for sale to customers calculated by adding the begining merchandise inventory to net purchases
  10. Income from operations
    determined by subtracting operating expenses from gross profit
  11. Selling expenses
    incurred directly in the selling of merchandise
  12. Administrative Expenses
    incurred in the administration of general operations of the business
  13. Other income
    revenue from sources other than the primary operating activity of a business
  14. Other expense
    is an expense that cnnot be traced directly to the normal operations of the business
  15. Freight
    The cost to get the product to us

    Included in cost for the perpetual system
  16. New Accounts for Perpetual System
    • Merchandise inventory - A
    • Sales - R
    • Sales returns and allowances - CR
    • Sales Discounts - CR
    • Cost of Merchandise Sold - COGS - E
    • Delivery Expense - E
  17. Cost of Goods Sold

    The cost of finished goods available for sale minus the ending finished goods inventory
  18. New accounts for Periodic System
    • Purchases - E
    • Purchases returns and allowances - E
    • Purchases Discounts - E
    • Freight in - E
  19. Freight In
    Cost of transportation

    Periodic System
  20. FOB Shipping Point
    Ownership changes when goods are shipped
  21. FOB destination
    Ownershop changes when they reach the buyers
  22. Consignment
    selling goods on someone else's behalf
  23. Internal Control
    defined as the procedures and processes used by a company to:

    • safegaurd its assets
    • process information accurately
    • ensure compliance with laws and regulations
  24. Employee Fraud
    the intentional act of decieving and employer for personal gain
  25. Elements of internal control
    • control environment
    • risk assessment
    • control procedures
    • monitoring
    • information and communication
  26. control environment
    overall attitude of management and employees about the importance of controls, factors infulencing a company's control environment are:

    • management's philosophy and operating style
    • the company's organizational structure
    • the company's personnel policies
  27. Control Procedures
    • 1. Competent personnel, rotating duties, and mandatory vacations
    • 2. seperating responsibilities for related operations
    • 3. seperating operations, custody of assets, and accouting
    • 4. proofs and security measures