Merchandising Basics
The difference between Sales Revenue and Cost of Goods Sold.
What is Gross Profit?
The buyer pays freight costs and debits Merchandise Invetory for the shipping amount.
What is FOB Shipping Point?
The second journal entry required after recording revenue when a sale is made on credit.
What is Cost of Goods Sold?
Income statement format that separates operating and non-operating activities.
What is Multiple-Step Income Statement?
Merchandising companies earn their main revenue through this.
What is the sale of merchandise?
Offered to buyers who pay their invoice early.
What is Purchase Discount.
Sales taxes collected from customers are recorded as this on the balance sheet.
What is Liability?
Profit divided by Net Sales.
What is Profit Margin?
The inventory system that continously tracks the quantity of merchandise sold.
What is Perpetual Inventory System?
Buyer returns damaged goods to supplier.
What is Purchase Return.
Seller grants a customer a price reduction without the goods being returned.
What is Sales Allowances?
Contra revenue accounts that are subtracted from Sales when calculating Net Sales.
What is Sales Returns and Allowances, and Sales Discounts?
The inventory system that tracks quantity of merchandise sold at the end of the acounting period.
What is Periodic Inventory System?
The seller records shipping costs to this account.
What is Freight Out?
Account seller uses when cusomters pays amount owing early.
What is Sales Discounts?
DAILY DOUBLE
Adjustment that ensures recorded inventory matches what is physically on hand at the end of an accounting period.