# Shared Flashcard Set

## Details

Accounting Ch 4-7
vocabulary and equations
32
Accounting
03/06/2013

Term
 Net income
Definition
 Revenues - Expenses
Term
 Gross Profit
Definition
 Sales - Cost of Goods Sold
Term
 Net Income
Definition
 Gross Profit - Expenses
Term
 What is merchandise inventory?
Definition
 an asset
Term
 Merchandise Available for Sale
Definition
 Beginning Inventory + net purchases
Term
 Merchandise Available for Sale (again)
Definition
 Ending Inventory + COGS
Term
 Purchase Allowance
Definition
 when you receive an item that isn't what you ordered or it's damaged, so you keep it for a discount
Term
 Free on Board (FOB) Shipping Point
Definition
Term
 Free on Board(FOB) Destination
Definition
 seller pays shipping costs
Term
 Which system do you record COGS as they occur(when a sale is made)?
Definition
 perpetual
Term
 what are the 3 seller accounts?
Definition
 -COGS-Sales Discounts-Sales Returns and Allowances(all temporary, debit accounts that go on the income statement)
Term
 Closing accounts
Definition
 1) close temp. credit (revenues, sales)2) close temp. debit (expenses, sales R&A, discounts, COGS, etc.)3) Income Statement4) Dividends
Term
 how do you find ending inventory with periodic system?
Definition
 count it
Term
 how do you find COGS in periodic system?
Definition
 Merchandise available for sale - Ending Inventory =COGS
Term
 The Periodic system
Definition
 Purchases, trans-in, Purchase R&A, and purchase discounts *in the perpetual system, these would all just be recorded as merchandise inventory
Term
 Net Sales
Definition
 sales - sales discounts - sales R&A = Net Sales
Term
 Total Purchases
Definition
 cost of merchandise + trans-in - purchase R&A - purchase discounts = Total Purchases
Term
 consigner
Definition
 owner (seller) still carries in inventory
Term
 consignee
Definition
Term
 Weighted average
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(<
Term
 Internal Controls
Definition
 1) protect assets2) ensure reliable accounting 3) promote efficient operations4) urge adherence to company policies
Term
 Principles of Internal Controls
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
Term
 Limitations of Internal Controls
Definition
 -Human error-Human fraud (opportunity, pressure, and rationalization)
Term
 what is one rule for internal controls?
Definition
 the cost of internal controls must not exceed the benefits
Term
 what is one way to control cash in a business?
Definition
 set up a petty cash fund
Term
 voucher system
Definition
 set of procedures/approvals designed to control cash disbursements and the acceptance of obligations
Term
 how is lost cash recorded in a petty cash fund?
Definition
 a debit to "cash over and short"
Term
 Bank Statement
Definition
 add: deposits in transit, bank error (?)deduct: outstanding checks, bank errors
Term
 Book Statement
Definition
 add (debit): interestdeduct (credit): recording error, NSF check, service charge (memorandum)
Term
 Interest
Definition
 principal * annual interest rate *time ex: 10000 *.05 *(90/360) = 125
Term
 Credit card stuff
Definition
 sales amount * credit card fee = credit card expenseex: 5000 * 0.04 = 200 <5000-200=4800 <
Term
 factoring fee
Definition
 debit (like any expense)
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