Exam 2 ACG 2021 Study Questions and Correct Answers
8 views 0 purchase
Course
ACG 2021
Institution
ACG 2021
Cost of Goods Sold First on the income statement (Sales Revenue - Cost of Goods Sold = Gross Profit) Beginning Inventory + Purchases - Ending Inventory
Advantages to Perpetual Inventory System Very detailed records of the cost of each item in inventory purchase and sale. Continuously shows invento...
exam 2 acg 2021 study questions and correct answer
cost of goods sold first on the income statement
advantages to perpetual inventory system very det
Written for
ACG 2021
ACG 2021
Seller
Follow
twishfrancis
Reviews received
Content preview
Exam 2 ACG 2021 Study Questions and
Correct Answers
Cost of Goods Sold ✅First on the income statement (Sales Revenue - Cost of Goods
Sold = Gross Profit)
Beginning Inventory + Purchases - Ending Inventory
Advantages to Perpetual Inventory System ✅Very detailed records of the cost of each
item in inventory purchase and sale.
Continuously shows inventory that should be on hand at any time.
Better control over the inventories than a periodic system.
Company knows/determines the cost of goods sold each time a sale occurs.
Calculation of Cost of Goods Sold ✅Beginning Inventory
Add: Purchases, net Goods available for sale
Less/Subtract: Ending inventory cost
Equals the Cost of Goods Sold
Freight Costs Incurred by Seller (Freight Out) ✅Considered to be an operating
expense
Freight Costs Incurred by Buyer (Freight In) ✅Considered part of the cost of the
purchasing of inventory
Purchase Return ✅Returned goods in exchange for credit if the sale was credit or
refund if transaction was made with cash purchase.
Purchase Allowance ✅Buyer may choose to keep the merchandise if the seller allows
for a price discount/reduction of the original purchase price.
Sales Discounts ✅Contra revenue account
Purchase Discounts ✅Credit terms that can possibly limit a buyer's ability to claim a
cash discount for immediate and/or a prompt payment
Advantages of Purchase Discounts Include: ✅The purchaser saves money,
the seller shortens operating cycle by converting accounts receivable to cash faster and
earlier
Closing Entries ✅This is when net income and dividends are put into retained earnings
so that the balance of retained earnings agrees with the retained earnings statement.
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 EFT, 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 this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller twishfrancis. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R162,27. You're not tied to anything after your purchase.
