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Shipping
Inventory Cost Flows
Multi-Step Income Statement
Ratios
General
100
FOB DESTINATION
What are the freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer.
100
AVERAGE-COST METHOD
What is an inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold
100
SALES RETURNS & ALLOWANCES
What is a transaction where the seller either accepts goods back from the buyer or grants a reduction in the purchase price.
100
PROFIT MARGIN RATIO
What is the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales.
100
CREDIT TERMS: 2/10, n/30
What is a 2% cash discount may be taken on the invoice price less (“net of”) any returns or allowances, if payment is made within 10 days of the invoice date (the discount period). Otherwise, the invoice price, less any returns or allowances, is due 30 days from the invoice date.
200
FREIGHT-OUT (DELIVERY EXPENSE)
What is the freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller
200
FIFO (FIRST-IN, FIRST-OUT)
What is an inventory costing method that assumes that the earliest goods purchased are the first to be sold.
200
GROSS PROFIT
What is the excess of net sales over cost of goods sold.
200
GROSS PROFIT
What gross profit expressed as a percentage, computed by dividing gross profit dollars by net sales.
200
SALES (SALES REVENUE)
What is the primary source of revenue in a merchandising company
300
FREIGHT-INE
What is: the buyer pays the transportation costs, these costs are considered part of the cost of purchasing inventory
300
LOWER OF COST OR MARKET
What is a basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost.
300
NET SALES
What is sales less sales returns and allowances less sales discounts.
300
DAYS IN INVENTORY
What is the measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover ratio.
300
LOWER OF COST OR MARKET
What is the situation requires a departure from the cost basis of accounting to the lower-of-cost-or-market basis in valuing inventory.
400
FOB SHIPPING POINT
What are the freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller
400
SPECIFIC-IDENTIFICATION METHOD-
What is an actual physical flow costing method in which items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory.
400
SALES DISCOUNT
What is the reduction given by a seller for prompt payment of a credit sale.
400
INVENTORY TURNOVER RATIO
What is a ratio that measures the liquidity of inventory by measuring the number of times average inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period.
400
Sales revenues total to $10,000, Sales returns and allowances are $500 and sales discounts are $1,000 resulting in $8,500. The $8,500 represents
What is Net Sales
500
FOB (FREE ON BOARD)
What is the term used to describe when title (ownership) of the goods transfers from seller to buyer.
500
LIFO (LAST-IN, FIRST-OUT)
What is an inventory costing method that assumes that the latest units purchased are the first to be sold
500
COST OF GOODS SOLD
What is the total cost of merchandise sold during the period.
500
CURRENT RATIO
What is the liquidity ratio computed by dividing current assets by current liabilities.
500
PERPETUAL INVENTORY SYSTEM
What is a detailed inventory system in which a company maintains the cost of each inventory item and the records continuously show the inventory that should be on hand.