Term
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Definition
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Term
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Definition
| Sales - Cost of Goods Sold |
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Term
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Definition
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Term
| What is merchandise inventory? |
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Definition
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Term
| Merchandise Available for Sale |
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Definition
| Beginning Inventory + net purchases |
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Term
| Merchandise Available for Sale (again) |
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Definition
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Term
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Definition
| when you receive an item that isn't what you ordered or it's damaged, so you keep it for a discount |
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Term
| Free on Board (FOB) Shipping Point |
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Definition
| buyer pays shipping costs |
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Term
| Free on Board(FOB) Destination |
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Definition
| seller pays shipping costs |
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Term
| Which system do you record COGS as they occur(when a sale is made)? |
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Definition
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Term
| what are the 3 seller accounts? |
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Definition
-COGS
-Sales Discounts
-Sales Returns and Allowances
(all temporary, debit accounts that go on the income statement) |
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Term
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Definition
1) close temp. credit (revenues, sales)
2) close temp. debit (expenses, sales R&A, discounts, COGS, etc.)
3) Income Statement
4) Dividends |
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Term
| how do you find ending inventory with periodic system? |
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Definition
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Term
| how do you find COGS in periodic system? |
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Definition
| Merchandise available for sale - Ending Inventory =COGS |
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Term
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Definition
Purchases, trans-in, Purchase R&A, and purchase discounts
*in the perpetual system, these would all just be recorded as merchandise inventory |
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Term
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Definition
| sales - sales discounts - sales R&A = Net Sales |
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Term
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Definition
| cost of merchandise + trans-in - purchase R&A - purchase discounts = Total Purchases |
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Term
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Definition
| owner (seller) still carries in inventory |
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Term
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Definition
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Term
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Definition
| (cost of available goods for sale)/(total units)
[(units@price)+(units@price)]/total units
ex: 8@5 and 4@6
[(8*5)+(4*6)]=(40+24)=64/12(< |
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Term
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Definition
1) protect assets
2) ensure reliable accounting
3) promote efficient operations
4) urge adherence to company policies |
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Term
| Principles of Internal Controls |
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Definition
-establish responsibility
-maintain adequate records
-insure assets and bond key employees
-separate record keeping from custody of assets
-divide responsibility for related transactions (separation of duties)
-perform regular and independent reviews |
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Term
| Limitations of Internal Controls |
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Definition
-Human error
-Human fraud (opportunity, pressure, and rationalization) |
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Term
| what is one rule for internal controls? |
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Definition
| the cost of internal controls must not exceed the benefits |
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Term
| what is one way to control cash in a business? |
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Definition
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Term
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Definition
| set of procedures/approvals designed to control cash disbursements and the acceptance of obligations |
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Term
| how is lost cash recorded in a petty cash fund? |
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Definition
| a debit to "cash over and short" |
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Term
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Definition
add: deposits in transit, bank error (?)
deduct: outstanding checks, bank errors |
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Term
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Definition
add (debit): interest
deduct (credit): recording error, NSF check, service charge (memorandum) |
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Term
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Definition
principal * annual interest rate *time
ex: 10000 *.05 *(90/360) = 125 |
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Term
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Definition
sales amount * credit card fee = credit card expense
ex: 5000 * 0.04 = 200 <5000-200=4800 < |
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Definition
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