Terms
A business that sells merchandise directly to the public
What is a retailer
This inventory method should be used if you have unique items
What is specific identification
Accounts receivable turnover is calculated by
What is net sales divided by average accounts receivable
Net sales of $325,000, gross profit of $175,000, and net income of $15,000. Cost of goods sold?
What is $150,000
Type of receivable supported by a promissory note
What is notes receivable
Two ways of recording purchases when we have credit terms available
What are the net-method and the gross-method
This inventory costing method most closely resembles the actual physical flow of inventory
What is FIFO
The inventory turnover rate provides an indication of how quickly the inventory on hand
What is sells
Sales $2,850, Inventory $1,500, Cost of goods sold $2,400. Gross profit?
What is $450
An outside auditor must evaluate the client's internal controls and report on them as part of the audit report is a requirement of which law?
What is Sarbanes-Oxley Act
The uncollectible accounts of credit customers who do not pay what they have promised
What is bad debts
When prices are increasing, this inventory method will produce the highest cost of goods sold
What is LIFO
Inventory turnover is calculated by
What is dividing cost of goods sold by average inventory
During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $75 million, and average inventory of $50 million. The inventory turnover is
What is 10
Sales discounts and allowances is this type of account
What is a contra-revenue account
Two methods of estimating uncollectible receivables are
What are aging-of-accounts, percentage of sales, percentage of receivables
Recieving deliveries of materials from suppliers just before the materials are used in production
What is just-in-time concept of inventory
The days in accounts receivables rate is calculated by
What is dividing the days in the year by the account receivables turnover
During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $75 million, and average inventory of $50 million. The accounts receivable turnover is
What is 8
The Allowance for Bad Debts has a credit balance of $2,500 before the adjusting entry. Company estimates that 5% of $325,000 in credit sales will be uncollectible. What amount is reported on the income statement for Bad Debts Expense?
What is $16,250
The difference between the face value of accounts receivable and the net realizable value of accounts receivable
What is the Allowance for Doubtful Accounts
This principle states that a company needs to use the same inventory costing method and if they change it, they must disclose the reason why
What is the consistency principle
You calculate the gross profit ratio by
What is dividing gross profit by net sales
The Cash account in the ledger of Clear Windows shows a balance of $12,596 at September 30. The bank statement, however, shows a balance of $16,253 at the same date. The only reconciling items consist of a bank service charge of $16, a large number of outstanding checks totaling $6,740, and a deposit in transit. The cash balance
What is $12,580
Accounts Receivable, debit balance of $100,280; Allowance for Doubtful Accounts, credit balance of $1,025. What amount should be debited to Bad Debts Expense assuming 5% of accounts are estimated to be uncollectible.
What is $3,989