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FOB Shipping Point
The Purchase of Merchandise Inventory on account.
DR Merchandise Inventory
CR Accounts Payable
Purchase of Merchandise Inventory...
DR Merchandise Inventory
CR Cash
Net Income Formula (Income Statement)
Revenues - Expenses = Net Income
Free 100 points
woop woop! :0
Ownership transfers at the destination, and goods in transit are owned by the seller.
FOB destination
DR Accounts Payable
CR Cash
A sale without the discount applied.
CR Accounts Receivable
Gross Profit Formula
Net Sales - COGS
records COGS at each time of each sale. (continuous)
Perpetual Systems
2/10,n/60
how long is the credit period?
60 days
Defective Merchandise or Returned Merchandise
DR Accounts Payable
CR Merchandise Inventory
Returning Goods back to Inventory
DR Merchandise Inventory
CR Cost of Goods Sold
Net Income Formula
hint: it's NOT Revenues - Expenses gimme the other one.
Gross Profit - Expenses
records COGS at the end of the period.
Periodic Systems
The condensed version of the multiple-step income statement
Single-Step Income Statement
Cost of a Sale
DR Cost of Goods Sold
CR Merchandise Inventory
Goods Returned (Sales)
DR Sales Returns and Allowances
Cr Cash
Acid test ratio Formula
quick assets / current liabilities
encourages buyers to pay earlier
cash discounts
5/10,n/30
how much is the discount worth?
5%
A payment within the discount period
DR Accounts Payable
CR Merchandise Inventory (discount)
CR Cash
A sale with a discount
DR Sales Discount
CR Accounts Receivable
Gross Margin Ratio Formula
(Net sales - COGS) / Net Sales
Gross Profit, Operating expenses, General and administrative expenses, Income from operations, and Net Income are all a part of which statement?
Multiple Step Income Statement