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Service and Merchandising
Purchases Inventory
Sales Inventory
Income Statement
Determining Inventory Quantities
100
This type of company sells an idea, not a product, and there is no cost of goods sold.
What is a Service Company?
100
In this inventory system, a company determines the cost of goods sold each time a sale occurs
What is the perpetual inventory system?
100
Companies earn this when the goods are transferred from the seller to the buyer.
What is sales revenue?
100
This income statement includes only one step, subtracting total expenses from total revenues to determine net income (or loss).
What is the single-step income statement?
100
All companies must determine this at the end of the accounting period, no matter what inventory system they are using.
What is the inventory quantity?
200
This type of company buys and sells merchandise.
What is a merchandising company?
200
This account is credited when goods are purchased on account.
What is Accounts Payable?
200
This account is debited when a credit sale is made.
What is Accounts Receivable?
200
This income statement has three important line items: gross profit, income from operations, and net income.
What is the multiple-step income statement?
200
Companies take a physical inventory of their items to determine the cost of goods sold for the period when using this inventory system.
What is the periodic inventory system?
300
These companies purchase and sell goods directly to consumers.
What are retailers?
300
This account is debited when goods are purchased on account.
What is Merchandise Inventory?
300
This account credited when a credit sale is made.
What is Sales?
300
This is another name for the sales returns and allowances, and sales discounts accounts in the income statement.
What is a contra account?
300
This is actually counting, weighing, or measuring each kind of inventory on hand.
What is taking a physical inventory of goods on hand?
400
These companies sell goods to retailers.
What are wholesalers?
400
These are the two freight terms used when designating who pays for transporting goods.
What are FOB shipping point and FOB destination?
400
This account is debited when recording cost of merchandise sold.
What is Cost of Goods Sold?
400
This is also known as gross margin.
What is Gross Profit?
400
This is deciding whether the goods included in the count belong to the company or not.
What is determining the ownership of goods?
500
These two systems are used to account for inventory.
What are perpetual and periodic?
500
The seller places the goods free on board to the buyer's place of business and the seller pays the freight.
What is FOB destination?
500
This account is credited when recording cost of merchandise sold.
What is Merchandise Inventory?
500
These activities are reported in the income statement immediately after the operating activities.
What are the non-operating activities?
500
These are goods not yet received or delivered.
What are goods in transit?