Term
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Definition
inventory costs such as price of goods purchased, shipping and handling costs, transit insurance, and storage costs |
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Term
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Definition
expenses in which they are incurred
aka selling and administrative costs |
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Term
selling and administrative costs |
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Definition
costs that are not included in inventory
examples: advertising, administrative salaries, sales commissions, insurance, and interest |
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Term
gross margin aka gross profit (equation is?) |
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Definition
sales - costs of goods sold = gross profit |
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Term
perpetual inventory system |
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Definition
inventory account is increased when merchandise is purchased each time merchandise is sold, inventory account is decreased |
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Term
FOB shipping point vs. FOB destination |
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Definition
FOB shipping point - buyer responsible for transportation costs (aka trans. in)
FOB destination - seller responsible for transportation costs (aka trans out) |
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Term
multistep income statement |
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Definition
income statemenst that show additional relationships such as gains and losses, interest revenue, and interest expense |
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Term
single-step income statements |
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Definition
income statements that display a single comparison of total revenues and total expenses |
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Term
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Definition
gross margin net sales
company with higher gross margin percentage is pricing its products higher |
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Term
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Definition
net income net sales
-net income expressed as percentage of sales provides insight as to how much of each sales dollar is left as net income after all expenses are paid
-company with HIGHER return on sales ratio is doing a better job of controlling expenses |
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Term
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Definition
how much cash company receives from selling inventory |
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Term
Cost of goods available for sale equation? |
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Definition
beginning inventory + purchases cost of goods available for sale |
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Term
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Definition
actually buy stocks from company |
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Term
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Definition
after stock goes onto market and is sold and resold, it's secondary |
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Term
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Definition
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Term
FIFO, LIFO, Weighted Average |
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Definition
1. Determine cost of inventory (use one of the 3 choices)
2. Apply lower of cost or market rule
3. Apply net realizable value rule |
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Term
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Definition
one year of operating cycle |
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Term
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Definition
any asset that can be converted to cash (normally) within a year |
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Term
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Definition
listed in order of their liquidity |
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Term
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Definition
current assets current liabilities |
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Term
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Definition
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Term
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Definition
ability to pay debt long term
debt/asset ratio - want a low percent |
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Term
current assets (examples) |
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Definition
cash marketable securities accounts receivable short-term notes receivable interest receivable inventory supplies prepaids |
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Term
noncurrent assets (examples) |
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Definition
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Term
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Definition
accounts payable unearned revenues short-term notes payable wages payable taxes payable interest payable current portion of long term debt |
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