Exam (elaborations)
Financial Accounting Exam 2 Latest Update
- Course
- Institution
Financial Accounting Exam 2 Latest Update...
[Show more]
Content preview
Financial Accounting Exam 2 Latest UpdateInventory - ANSWER Merchandise that the company intends to sell to its customers
Merchandising Companies - ANSWER Companies that sell, but not manufacture,
merchandise to customers; wholesale and retail companies such as Wal-Mart, Nieman
Marcus
Manufacturing Companies - ANSWER Create merchandise from underlying raw
materials; Exxon and Boeing
Service Companies - ANSWER Provide services to customers; law firms, consulting
companies
True - ANSWER Accounting for inventories is important because it can have a material
effect on both the BALANCE SHEET (ENDING INVENTORY) and the INCOME
STATEMENT (COST OF GOODS SOLD)
Gross Sales Revenue - ANSWER Measures the value of inventory delivered to, and billed
to, customers, often referred to as the "invoice value"
Sales Returns and Allowances - ANSWER Contra-revenue account to record refunds to
customers or credits to the customer's account. Records the reduction in sales revenue
either because of the return of unsatisfactory merchandise or because an allowance
was granted on unsatisfactory merchandise.
Sales Discounts - ANSWER Contra-revenue account to record discounts given to
customers as an incentive for early payment of the customer's account.
Freight-Out - ANSWER Transportation cost paid by the seller on merchandise deliverd to
, the customer; this is a selling expense, not a contra-revenue account; not included in
net sales
Net Sales - ANSWER Gross Sales less all contra-revenue accounts (sales returns and
allowances and sales discounts)
Gross Purchase Cost - ANSWER Measures the cost of inventory acquired as billed to the
company by the supplier
Returns and Allowances - ANSWER Account used to record the reduction of the
purchase cost for the return of, or allowance granted for, unsatisfactory goods
purchased
Purchase Discounts - ANSWER Account used to record the reduction of the purchase
cost for discounts granted by the supplier for early payment of account payable
Freight-In - ACCOUNT To record the increase in the purchase cost of inventory due to
the transportation costs paid by the buying company; added to net purchases
Net Purchases - GROSS PURCHASE COST - Purchase Returns and Allowances -
Purchase Discounts + Freight-In
FOB Shipping Point - TITLE passes to the buyer when the goods are placed on the
common carrier and the buyer pays the shipping costs
FOB Destination - ANSWER Title passes to buyer when goods arrive at buyer's location
and seller pays shipping cost
COGS - ANSWER Expense on the income statement that represnets the cost of inventory
sold to customers to produce Sales Revenue
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Easton. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
71498 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now