Exam (elaborations)
Accounting Exam 4 - Ch 6 Questions with Latest Update
- Course
- Accounting
- Institution
- Accounting
Accounting Exam 4 - Ch 6 Questions with Latest Update
[Show more]
Content preview
Accounting Exam 4 - Ch 6 Questionswith Latest Update
what is inventory - Answer-a tangible resource that is held for resale in the normal
course of operations
"intended for sale" meaning - Answer-differentiates inventory from other operational
assets
inventory is recorded at ______ cost - Answer-acquisition
inventory becomes a _____ when sold called _____ - Answer-expense ; cost of goods
sold
what does cost of goods sold impact - Answer-gross profit
another name for gross profit - Answer-gross margin
cost of goods sold impacts _____ - Answer-gross profit
what is a key performance measure - Answer-gross profit
Gross profit represents the _____ of a company - Answer-merchandising profit
what is gross margin - Answer-the amount of resources that are left to pay operating
expenses and provide for net income
what are operating expenses consist of (what type of expenses) - Answer-selling and
administrative expenses
what = gross profit - Answer-revenue - COGS
revenue - COGS = - Answer-gross profit
companies that purchase inventory in a finished condition and hold it for resale without
further processing - Answer-merchandisers
companies that buy and transform raw materials into a finished product which is then
sold - Answer-manufacturers
what are the 3 classifications of inventory - Answer-raw materials, work in process,
finished goods
what is perpetual - Answer-cost of goods sold updated with each sale
, what is periodic - Answer-cost of goods sold are recorded only at the end of a period
what equals ending inventory - Answer-begininning inventory + net purchases
(discounts, returns, allowances) + freight in (shipping paid by buyer) = CGAFS - COGS
= ending inventory
FOB shipping point - Answer-Freight terms indicating that ownership of goods passes to
the buyer when the public carrier accepts the goods from the seller.
recorded at cost means - Answer-purchase price of the merchandise plus any cost of
bringing the goods to sellable condition and location
what does the inventory account represent - Answer-inventory account represents the
net cost of inventory that is on hand and ready to sell
in perpetual system what updates when a sale is made - Answer-it will not only record
the sale but also update its inventory and cost of goods sold balances by decreasing
inventory and increasing cost of goods sold
when recording perpetual inventory it is recorded in historical cost basis, meaning -
Answer-The historical cost principle requires the activities of a company to be measured
at their historical cost—the exchange price at the time the activity occurs
how is the purchase of inventory recorded in perpetual - Answer-by increasing the
inventory account
how do purchase discounts effect accounts in perpetual - Answer-early pay discounts
taken reduce the inventory account
how does purchase returns effect in perpetual - Answer-returned merchant reduces
inventory
how does purchase allowance effect in perpetual - Answer-price concession for
defective merchandise reduces inventory
where are transportation/shipping costs included - Answer-in inventory if costs are the
legal responsibility of the buyer
where are shipping terms stated and where is legal responsibility indicated - Answer-
stated on invoice and indicated in shipping terms
what is fob shipping point - Answer-ownership of the goods passes to the buyer when
the public carrier accepts the goods from the seller
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lectknancy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52510 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now