QUIZ 34 MERCHANDISE FOA

Sales Revenue

Account title used for revenue earned when goods are delivered to customers.

Merchandise Inventory, Beginning

Stock of goods unsold the previous accounting period.

Freight In

Represents transportation cost, which is added to the cost of goods bought for resale.

Distribution Expense

Operating expenses incurred in storing and marketing the goods.

FOB Shipping Point

A freight payment agreement is when freight is payable only upon arrival of the goods bought.

Trade Discount

Discount granted to the customer on the date of purchase based on the catalogue price.

Goods Available for Sale

Account title used for goods bought for resale by the company.

Furniture and Fixtures

Account title used when buying a table and chairs for use by the company.

Cash Discount

A discount granted to a customer for paying his account promptly.

Function of expense method

Income statement form showing costs and expenses according to its function.

Purchases

The sum of net purchases and beginning merchandise inventory.

Purchase Returns and Allowances

A reduction in the cost of goods purchased for resale when the goods are returned to the supplier for being defective or spoiled.

FOB Destination

Ownership of goods is transferred only upon delivery to the buyer’s place of business.

Freight Out

An account used to record transportation costs incurred by the seller.

Periodic Method

A method of accounting wherein the cost of the merchandise sold is determined only after making a physical inventory.

Merchandiser

One who buys tables and chairs for resale.

Administrative Expenses

Expenses needed in the general administration of the business.

Perpetual Method

A method that keeps a detailed recording of inventory for each item stocked.

Multi-Step Form

Income statement form showing intermediate margin of figures starting from the major activities and ending with minor activities.

Gross Income

Excess of net sales over cost of sales.