Term
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Definition
| Time it takes a business to start with cash, purchase inventory, sell the inventory, and finally collect cash from the customers |
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Term
| What is the difference between manufacturing and merchandising |
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Definition
Manufacturing uses raw materials to make the inventory they sell and thus take longer than merchandising to make profits Manufacturing sells inventory to wholesalers, who sell it to retailers, who sell to public Merchandising companies purchase the good they sell in ready to sell condition. Merchandising has an additional expense item called Less: Cost of Good Sold (amount it cost to make them) |
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Term
Revenue from Sales Less: (what) (what) |
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Definition
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Term
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Definition
Ledger breaking down into separate entries of specific company within the General Ledger or Control Account |
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Term
| Perpetual inventory system |
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Definition
| Two entries, one for the amount of goods sold, and other for the amount to produce items (definition- the inventory account is continuously updated to reflect purchases, sales and returns of inventory.) |
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Term
| Periodic Inventory System |
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Definition
| no effort is made to keep the inventory account or Cogs account up to date. |
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Term
| Perpetual Inventory System On September 5, Worley Company purchased 100 laser lights for resale of $30 per unit from Electronic City on account |
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Definition
Inventory 3000 Accounts Payable 3000 |
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Term
Perpetual On September 10, Worley Co. sold 10 laser lights for $50 per unit on account to ABC Radios |
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Definition
Accounts Receivable (ABC) 500 Sales 500 Cost of Goods Sold 300 Inventory 300 |
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Term
Perpetual On September 15, Worley Co. paid Electronic City 3000 for the September 5 purchase. |
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Definition
Accounts Payable (E.C.) 3000 Cash 3000 |
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Term
| Perpetual Inventory System On September 22, Worley Co. received $500 from ABC Radios as payment in full for their purchase on September 10. |
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Definition
Cash 500 Account Receivable (ABC) 500 |
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Term
| Periodic Inventory System On September 5, Worley Co. purchased 100 laser lights for resale for $30 per unit from Electronic City on account. |
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Definition
Purchases 3000 Accounts Payable (E.C.) 3000 |
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Term
Periodic On September 15, Worley Co. paid Electronic City 3000 for the September 5 purchase. |
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Definition
Accounts Payable (E.C.) 3000 Cash 3000 |
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Term
Periodic On September 10, Worley Co. sold 10 laser lights for $50 per unit on account to ABC Radios. |
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Definition
Accounts Receivable (ABC) 500 Sales 500 |
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Term
Periodic On September 22, Worley Co. received $500 from ABC radios as payment in full for their purchase on September 10 |
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Definition
Cash 500 Accounts Receivable (ABC) 500 |
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Term
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Definition
Inventory (Beg. Of the year) 14000 Add: Purchases 130000 Cost of goods available for sale 144000 Less: Inventory 12000 Cost of Goods Sold 132000 |
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Term
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Definition
Cost of Goods Sold 144000 Inventory (beg. of year) 14000 Purchases 130000 Inventory (end of year) 12000 Cost of Goods Sold 12000 |
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Term
Closing Entries in a Perpetual Inventory System and Periodic Inventory System |
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Definition
Close Revenue (including sales) to Income Summary. Close Expenses accounts (including Cogs) to Income Summary Close Income Summary account to Retained Earnings Close Dividends to Retained Earnings Step 1 is to close Revenue to Income Summary. Since Revenue has a credit balance, a debit is made to close it and a credit is made to Income Summary. Step 2 is to close all expense accounts to Income Summary. This includes the Cost of Goods Sold expense account. Since these accounts have a debit balance, they are credited and a debit is made to Income Summary for their total. Step 3 is to close Income Summary to Retained Earnings. Step 4, the final step, is to close Dividends to Retained Earnings. Since the Dividend account has a debit balance, a credit is made to close it and a debit is made to the Retained Earnings account. |
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Term
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Definition
(2) Percentage of discount, (10) discount period is available,(n) net, (30) # of days when full amount is due |
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Term
Net Method On July 6, Play Clothes purchased 4000 of merchandise on credit with terms of 2/10, n/30 On July 15, Play Clothes pays the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes. |
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Definition
4000*.98=3920 Inventory 3920 Accounts Payable (Clothes) 3920 ---------------------------------------------- Accounts Payable 3920 Cash 3920 |
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Term
Now, Play Clothes waited until July 20 to pay the amount due in full to Kid’s Clothes. Prepare the journal entry for Play Clothes |
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Definition
Accounts Payable 3920 Purchase Discounts Lost 80 Cash 4000 |
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Term
Gross Method On July 15, Play Clothes pays the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes. |
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Definition
Accounts Payable (Clothes) 4000 Cash 3920 Purchase Discounts Taken 80 |
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Term
Now, Play Clothes waited until July 20 to pay the full amount due to Kid’s Clothes. Prepare the journal entry. |
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Definition
Accounts Payable 4000 Cash 4000 |
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Term
Returns of Unsatisfactory Merchandise On August 5, Play Clothes returned $500 of unsatisfactory merchandise purchased from Kid’s Clothes on credit terms of 2/10, n/30. The purchase was originally recorded at net cost. Prepare the journal entry for Play Clothes. |
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Definition
Accounts Payable (Clothes) 490 Inventory 490 |
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Term
| Income Statement’s Less: Sales returns and allowances records... Income Statement’s Less: Sales discounts records... |
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Definition
price discounts made by customers who pay within the sale’s discount period returns and price reduction for dissatisfaction. |
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Term
| RevenueSales Less: Sales returns and allowances and Less: Sales Discount Net Sales |
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Definition
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Term
Net Method On July 15, Kid’s Clothes receives the full amount due form Play Clothes from the July 6 sale. |
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Definition
Cash 3920 Sales Discounts 80 Accounts Receivable 4000 |
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Term
Perpetual Assume that it wasn’t until July 20 that Kid’s Clothes received the full amount due from Play Clothes from the July 6 sale. Prepare the journal entry for Kid’s Clothes |
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Definition
Cash 4000 Accounts Receivable (Clothes) 4000 |
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Term
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Definition
Cash 1070 Sales Tax Payable 70 Sales 1000 |
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Term
| Companies may have several special journals such as a Cash Receipts Journal, Cash Payments Journal, Sales Journal, and several others. What are they used for? |
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Definition
| Analysts use measure to gain insights such as checking net sales or gross profit margins |
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