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Accounting 2

QuestionAnswer
Cash discount Reduction in the price of merchandise granted by a seller to a buyer when payment is made within the discount period.
Cost of goods manufactured total manufacturing costs (direct materials, direct labor, and factory overhead) for the period plus beginning work in process less ending work in process; also called net cost of goods manufactured and cost of goods completed.
Credit period Time period that can pass before a customer's payment is due
Credit terms Description of the amount and timing of payments that a buyer agrees to make in the future
Discount Period Time period in which a cash discount is available and the buyer can make a reduced payment
FOB Shipping Point Means the buyer pays shipping costs and accepts ownership of goods when the seller transfers goods to the carrier
FOB Destination Means the seller pays shipping costs and the buyer accepts ownership of goods at the buyers place of business
General and administrative expenses Expenses that support the operating activities of a business
Gross Margin Net sales minus cost of goods sold
Gross Profit Net sales minus cost of goods sold; also called gross margin
Gross Method Methods of recording purchases at the full invoice price without deducting any cash discounts
Inventory Goods a company owns and expects to sell in its normal operations
Merchandiser Entity that earns net income by buying and selling merchandise
Sales Gross increase in equity from a company's business activities that earn income
Sales return and allowances contra-revenue account deducted from Sales. It is a sales adjustments account that represents merchandise returns from customers, and deductions to the original selling price when the customer accepts defective products.
Sales discount Term used by a seller to describe a cash discount granted to buyers who pay within the discount period
Net sale Amount earned after subtracting all expenses necessary for and matched with sales; also called income, profit, or earnings
Selling expenses Expenses of promoting sale, such as displaying and advertising merchandise, making sales, and delivering good to customers.
Shrinkage Inventory losses that occur as a result of theft or deterioration
Consignee receiver of goods owned by another who holds them for purposes of selling them for the owner
Consignor Owners of goods held by another who hols them for purpose of selling them for the owner
Consistency concept Principle that prescribes use of the same accounting methods
FIFO Method to assign cost to inventory that assume items are sold in the order; earliest items purchases are the first sold
LIFO Method for assigning cost to inventory that assumes cost for the most recent items purchases are sold first and charged to costs of goods sold
Net realizable Value expected selling price (value) of an item minus the cost of making the sale
Specific identification Method for assigning cost to inventory when the purchase cost of each item in inventor is identifies and used to compute cost of goods sold and or cost of inventory
Internal control All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Bank reconcilliation A report explaining any difference between the checking account balance according to the depositors's records and the balances reported on the bank statement
Canceled checks checks the bank has paid and deducted from the customer's account during the accounting period
Cash includes currency and coins along with the amounts on deposit, things such as customer's checks, cashier checks, certified checks, and money orders
Cash equivalent All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Cash short and over is an income statements account recording the income effect of cash overages and cash shortages
Check Document signed by a depositor instructing the bank to pay a specific amount to a designated recipient
Deposit in transit Deposits made and recorded by the depositor but nit yet recorded on the bank statement
Outstanding checks checks written by the depositor, deducted on the depositor's records, and sent to the payees but not yet received by the bank for payment at the bank statement date.
Petty cash disbursements small payments required for times such as postage, courier fees. minor repairs, and low-cost supplies
Voucher system Set of procedures and approvals designed to control cash disbursement and the acceptance of obligations
Created by: Ve3591