Test #2 Flashcards Preview

Financial Accounting - Alameda > Test #2 > Flashcards

Flashcards in Test #2 Deck (9)
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1
Q

Income statement - Merchandise Business

A
Gross Sales 
Less: Return
          Discount
=Net Sales 
Less: COGS
=Gross Profit
Less: Operating Expense
=Net Income
2
Q

F.O.B Destination

A

Sellers pays the freight costs from the shipping point to the buyer’s final destination.

Seller ->DR Delivery Expense
Income Statement - selling expense

3
Q

F.O.B Shipping Point

A

Buyer pays the freight cost from the shipping point to the final destination

Buyer -> Added to cost of inventory = DR Inventory

4
Q

Allocation of Cost (How to determine COGS)

3 methods

A
  1. Average
  2. FIFO
  3. LIFO
5
Q

Set Up Reserve Account

2 methods

A
  1. % of Credit Sales

2. A/R Aging Report

6
Q

Depreciation (of long term fixed asset)

3 methods

A
Given
Cost, life, Residual Value, Depreciation Cost
1. Unit of production 
2. Straight line
3. Double Declining (2x Straight line )
7
Q

Chart of Accounts - Merchandise Business

A

Assets : Inventory
Revenue: Sales, Sales Returns (Credit memo), Sales Discount (Contra acct to sales)
Cost and Expenses: COGS, Delivery Expense

8
Q

Credit Memo

A

Seller
Sales Returns
AR-xxx company

Inventory
COGS

9
Q

Debit Memo

A

Informs the seller of the amount the buyer proposes to debit to AP due the seller. States the reasons for return

AP
Inventory