Accounting Ch.5 Word Scramble
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Question | Answer |
Service Business? | Fees Earned-Operating Expenses=Net income |
Merchandising Business? | Sale-Cost of Merchandise=Gross Profit Gross Profit-Operating Expenses=Net Income |
Gross Profit Formula? | Sales-Cost of Merch. Sold=Gross Profit |
Net Income Formula? | Gross Profit-Operating Expenses=Net Income |
The Operating Cycle? | Cash->Purchase Activity->Products->Sales Activity->Accts. Receivable->Collection Activity->Cash |
Periodic Inventory System? | Merchandise Inventory at the end of the period is determined by taking a physical count of inventory on hand. |
Perpetual Inventory System? | Amounts of inventory purchased, for sale, and sold are continuously updated in the inventory records. |
Purchase Discounts? | Buyer may receive a discount from the seller for early payment of amount owed. |
Purchase Return? | Actually returning merchandise that is damaged or does not meet the specifications of the orders. A.K.A=Allowances |
Debit Memo? | Informs the seller of the amount the buyer proposes to debit to the account payable due the seller. |
Credit Memo? | Authorizes a credit to (decrease) the buyers acct.receivable. |
Free on Board (FOB) Shipping Point? | If ownership of the merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier. |
FOB Destination? | If ownership of the merchandise passes to the buyer when the buyer receives the merchandise. |
FOB Shipping Point Illustration? | Seller->Title passes to Buyer->Freight->Buyer=Buyer pays Freight |
FOB Destination? | Seller->Freight->Freight->Title passes to Buyer->Buyer=Seller Pays Freight |
Trade Discounts | When wholesalers offer special discounts to certain classes of buyers who order large quantities |
Sales? | Total amount charged customers for merchandise sold, including cash sales and sales on account. |
Net Sales? | Net Sales=Sales-Sales Returns-Allowances-Sales Discounts |
Account Form Balance Sheet? | Assets on left side, liabilities and owner's equity on right |
Report Form Balance Sheet? | Sheet is prepared in a downward sequence in three sections. |
Inventory Shrinkage/Shortage? | Loss of inventory due to theft. |
Ratio of Net Sales to Assets? | Measures how effectively a business is using its assets to generate sales. |
Ratio of Net Sales to Assets Formula? | Ration of Net Sales=Net Sales/Avg. Total Assets |
Purchases? | Purchases of inventory are recorded in the Purchases Account rather than in the Merchandise Inventory Account. |
Created by:
Mheath27
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