Income ffrom operations, shows the relationship between revenue earned from customers and expenses incurred in producing revenue.
A cash discount on sales taken by a customer
credit allowed a customer for the sale price of returned merchandise, resulting in a decrease in the vendor's accounts receivable
two types of inventory
prepetual and periodic
Merchandise inventory determined by keeping a continuous record of increases, decreases, and balance on hand
A merchandise inventory determined by counting, weighing, or measuring items of merchandise on hand
(finance) the net sales minus the cost of goods and services sold
Cash discount components
3/10, net 30, means the seller will tak 3 percent off if the purchase is made in 10 days but the payment is due in 30
a method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's demand
How to calculate net sales
gross less minus sales return and allowances and sales discount
Cost of goods sold
the total cost of buying raw materials and paying for all the factors that go into producing finished goods
Expenses incurred in paying for the day-to-day activities of the business
the act of stealing goods that are on display in a store
reimbursement for goods damaged while in transit or in use
the act of spoiling something by causing damage to it
Is a report that accounts for the differences between the bank statement and your records
a periodic statement prepared by a bank for each client
an estimate of the actual money received and paid out for a specific period
a creditor's accounts of money owed to him
allowance for doubtful accounts
contra-asset account containing the estimated uncollectible accounts receivable
cash and those assets eassily and directly convertible into known amounts of cash.
bank reconciliation steps
1. compare depoist. 2. Compare checks. 3. Add to the balance. 4. deduct what hasnt been recoreded by the depoistor. 5. make adjustments. 6. determine if the adjusting balances are equal. 7. prepare journal entries
depoist in transit
cash receipts recorded by the depoistor that reached the bank too late to be included in the bank statement for the current month.
checks that have not been deducted from the bank statement balance.
checks received from customers that the bank will not pay due to insufficient funds in the customer's bank account
money market funds, U.S. treasury bonds, and high grade commercial paper.
How do you list financial assests on the balance sheet
you list financail assets in current value
petty cash fund
A fund maintained to pay small unpredictable cash expenditures.
making an itemized list of merchandise or supplies on hand
Method to assign cost to inventory when the purchase cost of each item in inventory is identified and used to compute cost of inventory.
total cost divided by the quantity of output
First In First Out
Last in First out
Use of specific identification
can be used only when the actual cost of individual units of merchandise can be determinded from the acoounting records.
Method to estimate ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail.
gross profit method
Procedure to estimate inventory when the past gross profit rate is used to estimate cost of goods sold, which is then subtracted from the cost of goods available for sale.
lower cost market rule
requires that an asset be reported in the financial statements at whichever is lower-its historical cost or its market value (current replacement cost for inventory)
goods in transit
Goods moving between two points, often accompanied by a live bill of lading.
title and ownership of goods stays with the seller until they reach their destination; seller pays for shipping
FOB shipping point
Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
Inventory turnover rate
the number of times per year that inventory is purchased, consumed and replaced
assets that do not have physical substance
licenses that give an inventor the exclusive right to make, use, or sell an invention for a set period of time
a document granting exclusive right to publish and sell literary or musical or artistic work
noun. The right granted to an individual or a group to sell a product or service. verb To grant the right to sell a product or service
amount paid for an existing business above the value of its other assets
Expenditure that increases an asset's capacity or efficiency or extends its useful life. Capital expenditures are debited to an asset account
Expenditure whose purpose is to maintain a given level of services (or revenues generated from these expenditures). Ordinary repairs are an example. Revenue expenditures are expensed in the period in which they take place.
a distinctive characteristic or attribute
legal life of a patent
legal life of a copyright
life of creator and 70 years after death
social security taxes
are paid by workers and matched by the employer to provide a retirement income for those at age 62 and older
workers compensation insurance
A state or federal plan that covers medical care and other benefits for employees who suffer accidental injury or become ill as a result of employment.
A payroll deduction collected by employers by law and sent to the federal government to provide medical insurance to the elderly and to some disabled Americans.
(accounting) income received but not yet earned (usually considered a current liability on a company's balance sheet)
a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money