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Accounting 2
| Question | Answer |
|---|---|
| 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
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