Completing the Accounting Cycle

Vocabulary flashcards covering the adjustments and closing process for a merchandising company's accounting cycle.

Merchandising Company Adjusting Entries

Requires the same types of adjusting entries as a service company, with one additional adjustment for inventory to ensure the recorded inventory amount agrees with the actual quantity on hand.

Physical Count

An important control feature used to determine what is actually on hand, as opposed to what the perpetual system indicates should be there.

Merchandising Company Closing Entries

Requires the same types of closing entries as a service company, but also involves closing out Sales, Sales Returns and Allowances, Cost of Goods Sold, and Freight Out.

Merchandise Inventory

An asset account that is not closed at the end of the accounting period.