Term
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Definition
-Records continuously show inventory that should be on hand
-company determines cost of goods sold each time a sale occurs |
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Term
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Definition
| -cost of goods sols determined by count at the end of the accounting period |
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Term
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Definition
Beginning Inventory + Net Purchases = Goods Available for Sale
Goods Available for Sale - Ending Inventory = Cost of Goods Sold |
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Term
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Definition
| Ownership of goods passes to the buyer when the public carrier accepts good from seller |
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Term
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Definition
| Ownership of goods remains with seller until goods reach the buyer |
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Term
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Definition
-Return goods for credit if purchased on credit
-Receive cash refund for purchases made with cash
-Goods go back |
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Term
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Definition
-Goods don't go back
-seller grants allowance from purchase price |
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Term
| Sales Returns and Allowance |
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Definition
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Term
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Definition
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Term
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Definition
Sales Revenue - sales returns and allowance or sales discounts = Net sales
Net sales - costs of goods sold = gross profit |
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Term
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Definition
-Gross Profit/Net Sales
-High number is good |
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Term
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Definition
-Net Income/Net Sales
-high number is good |
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Term
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Definition
-Oldest good are first to be sold
-Count newest inventory as ending inventory |
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Term
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Definition
-Newest goods are first to be sold
-Count oldest inventory as ending inventory |
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Term
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Definition
-costs of goods sold/average inventory
-high number is good |
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Term
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Definition
-365/Inventory turnover ratio
-low number is good |
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Term
| Establishment of Responsibility |
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Definition
| -One person responsible for task |
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Term
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Definition
| -related duties should be assigned to different individuals |
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Term
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Definition
| -good documentation should be accounted for |
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Term
| Independent Internal Verification |
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Definition
| -records periodically verified by an employee who is independent |
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Term
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Definition
-bond employees
-rotate employees duties and require vacations
-background checks |
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Term
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Definition
-add deposits in transit
-subtract outstanding checks
-bank errors |
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Term
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Definition
-add notes collected by bank
-subtract NSF checks
-subtract service charges
-bank errors |
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Term
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Definition
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Term
| Allowance for Doubtful Accounts |
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Definition
-Credit balance
-Companies debit allowance for doubtful accounts and credit accounts receivable at same time |
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Term
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Definition
| Face value of note * annual interest rate * time in terms of one year = interest |
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Term
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Definition
-cash purchase price
-attorney's fees
-broker's commissions
-property taxes |
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Term
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Definition
-depreciate land along useful life
-driveways, parking lots, etc |
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Term
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Definition
-purchase price
-attorney fees
-remodeling, repairing
-construction costs, architect fees |
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Term
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Definition
-purchase costs
-sales tax
-freight charges
-insurance during transit |
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Term
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Definition
Cost - Salvage Value = Depreciable cost
Depreciable cost / useful life = depreciation expense |
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Term
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Definition
| net income / average total assets |
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