acc 100 midterms hail mary

profit formula

Revenues - Expense

Retained earnings formula

profit - dividends

equity formula

owners capital + retained earnings

Assets formula

Liabilities + equity

Bank loan payable

Liability
present obligations of an enterprise arising from past events, the settlement of which is expected to result in an outflow of resources

Accounts receivable

Asset
Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events (amounts owed by customers)

Sales revenue

Revenue
Inflows or other enhancements of assets of an entity or settlement of its liabilities from delivering or producing goods, rendering services, or other activities

Prepaid expense

Asset
Future economic benefit paid for in advance of consumption or use

Income tax payable

Liability
An obligation to transfer economic resources (taxes owed to the government) as a result of past transactions or events

Equipment

Asset
Tangible resources controlled by the entity that are expected to provide future economic benefits over multiple periods

Supplies expense

expense
Outflows or other using up of assets or incurrence of liabilities from delivering or producing goods, rendering services, or carrying out other major operations

Accounts payable

Liability
Obligations to pay suppliers for goods or services purchased on credit

Patent

Asset
An identifiable non-monetary asset without physical substance (intangible asset) providing future economic benefits

Service revenue

Revenue
inflows resulting from the rendering of services to customers

Owners’ capital

Equity
The residual interest in the assets of an entity that remains after deducting its liabilities

Advertising expense

Expense
Decreases in net assets resulting from promotional activities incurred to generate revenue

Interest payable

Liability
An obligation to pay interest on borrowed funds as a result of a past event

Office supplies

Asset
Unused physical goods held by a business that will provide future economic benefits when consumed

Deferred Revenue

Liability
An obligation to provide goods or services in the future because cash was collected in advance

Salaries payable

Liability
Unpaid obligations owed to employees for services already rendered

Wages expense

Expense
The cost of employee labor incurred during the reporting period to generate revenue

Cash

Asset
The most liquid resource controlled by the entity, immediately available for use in operations

Service Company

A business whose primary source of revenue is derived from providing services rather than selling physical products.

Merchandising Business:

A business that buys finished products from suppliers and resells them to customers to generate a profit

Retailer

A merchandising business that sells goods directly to individual consumers

Wholesaler

A business that buys large quantities of goods from manufacturers and resells them to retailers.

Inventory

Finished goods purchased by merchandisers to resell to customers within an operating cycle; classified as a current asset.

Cost of Goods Sold (COGS)

The total acquisition cost of inventory sold during a period, recognized as an expense on the income statement.

Markup

The dollar amount or percentage added to the cost of inventory to establish the selling price and generate profit.

Gross Profit:

The difference between sales revenue and the cost of goods sold (Selling Price − COGS).

Product Costs:

Costs incurred directly to purchase inventory and get it ready for sale on the shelf, including purchase price and inbound shipping.

Period Costs

Operating costs incurred in the normal course of business that are not product costs, such as rent, salaries, and advertising.

Perpetual Inventory System

An inventory system that continuously updates inventory and cost of goods sold records with every purchase and sale transaction.

Periodic Inventory System

An inventory system that records purchases during the period but calculates cost of goods sold only at period-end through a physical inventory count.

Accounts Payable

A liability account created when inventory or supplies are purchased on account (credit).

Accounts Receivable:

An asset account representing amounts owed to the business by customers who purchased on account (credit).

Credit Terms

Agreement terms specifying payment due dates and early payment discounts offered to buyers (e.g., 2/10, n/30).

2/10

2 percent discount within a 10 day frame

n/30

net payment due within 30 days

COD (Cash on Delivery

Payment terms requiring the buyer to pay for goods immediately upon delivery.

F.O.B. Shipping Point

Shipping terms where the buyer takes ownership of goods during transit and pays the freight charges, adding them to inventory cost.

F.O.B. Destination:

Shipping terms where the seller retains ownership during transit and pays the shipping costs.

Freight Out Expense:

An operating expense account used by sellers to record shipping costs incurred when delivering goods to customers under F.O.B. destination.

Sales Discounts:

A contra-revenue account used by sellers to record cash discounts granted to customers for paying invoices early.

Sales Returns and Allowances:

A contra-revenue account used by sellers to record merchandise returned by customers or price allowances granted for damaged goods.

Contra-Revenue Account:

An account with a balance opposite to sales revenue that reduces gross sales revenue to arrive at net sales.

Gross Profit Ratio:

A profitability metric calculated as (Gross Profit ÷ Sales Revenue) × 100

Single-Step Income Statement

An income statement format that totals all revenues together and subtracts all expenses in a single calculation.

Multiple-Step Income Statement

An income statement format for merchandisers that calculates subtotal metrics like Gross Profit and Profit from Operations before Net Profit