Chapter 5 Accounting For Merchandising Operations

Performance obligation

What is satisfied when the goods are transferred from the seller to the buyer? Answer with a single words or term.

COGS

What is between LIFO and FIFO? Answer with a single words or term.

Inventory

Freight Costs

________: incurred by the seller are an operating expense.

Credit Terms

________: may permit buyer to claim a cash discount for prompt payment.

Gross Profit

________ divided by sales= The operating cycles of a Merchandising Company ordinarily is longer than that of a service company.

Periodic System

________: Does not keep detailed records of the goods on hand.

Specific Identification

Four Methods to calculate cost of goods sold: ________: For very few items and Active physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory.

LIFO conformity rule

________ requires that if companies use LIFO for tax purposes they must all use it for financial reporting purposes.

Cost of goods

________ sold is the total cost of merchandise sold during the period.

________ gives the lowest income taxes.

Average Cost

________: Allocates cost of goods available for sale on the basis of weighted average of all the cost.

Advantages of the Perpetual System

________: Traditionally used for merchandise with high unit values, Shows the quantity and cost of the inventory that should be on hand at any time.

Unit costs

________ are applied to quantities to compute the total cost of the inventory and the cost of goods sold using the following costing methods.

Gross profit

________- operating expenses= net income.

Cost of goods

________ sold determined by count at the end of the accounting period.