Term
|
Definition
| inventory costs such as price of goods purchased, shipping and handling costs, transit insurance, and storage costs |
|
|
Term
|
Definition
expenses in which they are incurred
aka selling and administrative costs |
|
|
Term
| selling and administrative costs |
|
Definition
costs that are not included in inventory
examples: advertising, administrative salaries, sales commissions, insurance, and interest |
|
|
Term
| gross margin aka gross profit (equation is?) |
|
Definition
sales - costs of goods sold = gross profit |
|
|
Term
| perpetual inventory system |
|
Definition
inventory account is increased when merchandise is purchased
each time merchandise is sold, inventory account is decreased |
|
|
Term
| FOB shipping point vs. FOB destination |
|
Definition
FOB shipping point - buyer responsible for transportation costs (aka trans. in)
FOB destination - seller responsible for transportation costs (aka trans out) |
|
|
Term
| multistep income statement |
|
Definition
| income statemenst that show additional relationships such as gains and losses, interest revenue, and interest expense |
|
|
Term
| single-step income statements |
|
Definition
| income statements that display a single comparison of total revenues and total expenses |
|
|
Term
|
Definition
gross margin
net sales
company with higher gross margin percentage is pricing its products higher |
|
|
Term
|
Definition
net income
net sales
-net income expressed as percentage of sales provides insight as to how much of each sales dollar is left as net income after all expenses are paid
-company with HIGHER return on sales ratio is doing a better job of controlling expenses |
|
|
Term
|
Definition
| how much cash company receives from selling inventory |
|
|
Term
| Cost of goods available for sale equation? |
|
Definition
beginning inventory
+ purchases
cost of goods available for sale |
|
|
Term
|
Definition
| actually buy stocks from company |
|
|
Term
|
Definition
| after stock goes onto market and is sold and resold, it's secondary |
|
|
Term
|
Definition
|
|
Term
| FIFO, LIFO, Weighted Average |
|
Definition
1. Determine cost of inventory (use one of the 3 choices)
2. Apply lower of cost or market rule
3. Apply net realizable value rule |
|
|
Term
|
Definition
| one year of operating cycle |
|
|
Term
|
Definition
| any asset that can be converted to cash (normally) within a year |
|
|
Term
|
Definition
| listed in order of their liquidity |
|
|
Term
|
Definition
current assets
current liabilities |
|
|
Term
|
Definition
|
|
Term
|
Definition
ability to pay debt long term
debt/asset ratio - want a low percent |
|
|
Term
| current assets (examples) |
|
Definition
cash
marketable securities
accounts receivable
short-term notes receivable
interest receivable
inventory
supplies
prepaids |
|
|
Term
| noncurrent assets (examples) |
|
Definition
|
|
Term
|
Definition
accounts payable
unearned revenues
short-term notes payable
wages payable
taxes payable
interest payable
current portion of long term debt |
|
|
