Name that (A)JE
This is the purpose of adjusting journal entries
What is to update revenue and expense accounts, to provide an accurate picture of net income for the period?
Gross profit is calculated as...
What is
Net Sales
Less: Cost of Goods Sold ?
This inventory method assigns the cost of the newest items to CGS
What is LIFO?
This advantage of extending credit to business customers generally outweighs the disadvantages (such as wage costs, bad debts, & delayed receipt of cash)
What is increased sales revenue?
The % credit sales method multiplies credit sales*bad debt loss rate to calculate this amount reported on the Income Statement
What is bad debt expense?
This JE records interest accrued but NOT yet received (take lender's perspective)
What is
Dr. Interest Receivable
Cr. Interest Revenue ?
These terms indicate that ownership transfers to the buyer when the goods arrive at the buyer's location
What is FOB destination?
This inventory costing method results in the cost of the oldest inventory items being assigned to CGS
What is FIFO?
Net Sales/Average A/R calculates this financial ratio, a measure of how effectively a company extends credit and collects debt
What is A/R turnover?
Transportation costs paid by the buyer (freight-in) to bring goods to the buyer's location should be included in this account
What is Inventory?
This journal entry is used to make a bad debt adjustment (estimated bad debt)?
What is
Dr. Bad Debt Expense
Cr. Allowance for Doubtful Accounts ?
Under these terms, the seller recognizes revenue when the goods leave the seller's loading dock
What is FOB shipping point?
What is Sales Revenue or Operating Expenses (SG&A) or Other Expenses or Other Revenues?
This method of estimating bad debts emphasizes the correct valuation (aka end balance) of Allowance for Doubtful Accounts on the Balance Sheet
What is aging of A/R?
CGS/Average Inventory calculates this financial ratio
What is Inventory T/O?
This journal entry records the sale of giftcards
What is Dr. Cash
Cr. Deferred Revenue
?
Having up to date records of inventory at any given time is an advantage of this type of inventory system
What is perpetual?
Calculated as 365/Inventory T/O, this ratio tells us the average number of days from purchase to sale
What is days to sell?
Because expenses must be recognized in the same period that the related revenues are recognized, bad debts must be ____ in the period of sale
What is estimated & recorded?
Costs of goods available for sale are assigned to Cost of Goods Sold and Ending Inventory using these methods
What are inventory costing methods (LIFO, FIFO, WA)?
This journal entry would be made by a corporation ordering Chipotle catering, when the catering has not yet been billed or paid
What is
Dr. Catering Expense
Cr. Accounts Payable
?
If Chipotle takes out a bank loan, the related interest expense is classified as this type of expense on the multistep income statement
What is nonoperating or "other" expenses?
This inventory costing method uses the following formula for calculating both CGS and EI
CoGAFS/# units available for sale
What is Weighted Average?
This JE records the principal received back at the end of the loan term (take lender's perspective)
What is Dr. Cash
Cr. Notes Receivable ?
Fill in the blank: Specific Identification can be used when goods are ___ (high/low) turnover and (high/low) value.
What is low turnover and high value?