Acc Ch. 5

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Author:
genevalo
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90719
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Acc Ch. 5
Updated:
2011-06-15 06:53:13
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Accounting
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Chapter 5
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  1. Merchandise
    Consists of products, AKA goods, that a company acquires to resell to customers
  2. Merchandiser
    • Earns net income by buying and seeling merchandise
    • AKA wholesalers or retailers
  3. Wholesaler
    An intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other wholesalers
  4. Retailer
    Intermediary that buys products from manufacturers or wholesalers and sells them to consumers
  5. cost of goods sold
    The expense of buying and preparing the merchaandise
  6. Gross profit
    • AKA gross margin
    • Equals net sales less cost of goods sold
  7. Merchandise inventory
    Products that a company owns and intends to sell
  8. Inventory
    Products a company owns and expects to sell in its normal operations
  9. Perpetual inventory system
    Continually updates accounting records for merchandising transactions- specifically, for those records of inventory available for sale and inventory sold
  10. Periodic inventory system
    Updates the accounting records for merchandise transactions only at the end of the period
  11. Credit terms
    Include the amounts and timing of payments from a buyer to a seller
  12. EOM
    End of month
  13. Credit period
    The amount of time allowed before full payment is due
  14. Cash discount
    Sellers can grant this to encourage buyers to pay earlier
  15. Purchase discount
    A buyer views a cash discount as this
  16. Sales discount
    A seller views a cash discount as this
  17. Debit memorandum
    To inform the seller of a debit made to the seller's account in the buyer's records
  18. FOB
    • Free on board
    • determines who pays transportation costs
  19. Supplementary records
    The information outside the usual general ledger accounts
  20. Shrinkage
    the loss of inventory and it is computed by comparing a physical count of inventory with recorded amounts
  21. Selling expenses
    The expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goodds to customers
  22. General and administrative expenses
    Support a company's overall operations and include expenses related to accounting, human resource management, and financial management
  23. Single-step income statement
    • A widely used format
    • Lists cost of goods sold as another expense and shows only one subtotal for total expenses

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