ACC 2361 Exam 3

Inventories-

- Goods held for sale in the normal course of business or used in producing other goods for sale.

T/F Merchandisers report Inventory as a current asset, whereas service companies are more likely to report Supplies. 

True! Services companies need supplies to do a service.

Merchandisers report an expense called _____, which represents the total cost of all goods sold to customers during the period.

Cost of Goods Sold

What two extra things you might find on a merchandising company’s income statement but not on a service company income?

A.) Sales Rev, Total cost

B.) Sales Rev, Cost of goods sold

C.) Service Rev, Cost of goods sold

B.) Sales Rev, Cost of goods sold

Merchandising companies include…?

A.) retailers, wholesalers, manufacturing

B.) sales, wholesalers, manicuring

C.) manufacturing, wholesalers, department store

A.) retailers, wholesalers, manufacturing

Walmart is a example of a retailer?

True! Retailers sell finished goods directly to individual consumers

3 accounts are particularly important to a merchandiser.

A.) Inventory, Sales Revenue, and Cost of Goods Sold

B.) Supplies, Service Revenue, and Cost of Goods Sold

B.) Supplies, Sales Revenue, and Gross profit

A.) Inventory, Sales Revenue, and Cost of Goods Sold

Beginning inventory + Purchases=

Goods available for sale

Cost of good sold=

Beginning inventory + Purchases during the year - Ending inventory.

Gross profit=

Sales Rev- Cost of goods sold

gross profit represents-

-the profit earned before taking into account other expenses such as salaries, wages, depreciation, and so on.

A periodic inventory system updates the inventory records for merchandise purchases, sales, and returns at-

-the end of the accounting period.

A perpetual inventory system updates inventory records-

- every time an item is bought, sold, or returned.

The Periodic inventory system equation ends with-

-Cost of goods sold

T/F Using periodic, accurate records of the inventory on hand and the inventory that has been sold are unavailable during the accounting period.

True! Using periodic, to determine these amounts, employees must physically count the inventory, which they do at the end of the period, when the store is “closed for inventory.”

The Perpetual inventory system equation ends with-

-Ending inventory

T/F Periodic inventory system is that it allows managers to estimate shrinkage, the term for loss of inventory from theft, fraud, and error. 

False! Perpetual inventory system is that it allows managers to estimate shrinkage