Inventory Accounting Systems: Perpetual vs. Periodic Methods and Cost Calculations

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Finance - Personal Finance

charlotte1oxhi Created by 10 mon ago

Cards in this deck(27)

In a _____ inventory system, detailed records of the cost of each inventory purchase and sale are maintained continuously.

In a _____ inventory system, the cost of goods sold is determined by a count at the end of the accounting period.

When the buyer pays freight costs, these costs are considered part of the _____.

When the seller pays freight costs, these costs are considered to be an _____ expense.

A _____ occurs when the buyer returns the merchandise for credit or a cash refund.

A _____ occurs when the buyer keeps the merchandise and the seller grants an allowance for the purchase price.

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting _____ .

_____ terms may permit the buyer to claim a cash discount for prompt payment.

Net sales are calculated as sales revenue minus sales returns and allowances minus _____ discounts.

Gross Profit is calculated as _____ minus cost of goods sold.

The gross profit rate is calculated as gross profit divided by _____ .

_____ are amounts to be received in the future due to the sale of goods or services.

A _____ revenue account has a balance that is opposite to that of its related revenue account.

Cost of Goods Sold (COGS) is calculated as beginning inventory plus purchases minus _____ inventory.

The _____ method assumes the oldest inventory items are sold first, affecting gross profit and taxable income.

The _____ method assumes the most recently acquired items are sold first, affecting gross profit and taxable income.

The _____ cost method allocates the cost of goods available for sale on the basis of the weighted-average unit cost incurred.

During inflation, the _____ method produces a higher net income, while the _____ method produces a lower net income.

_____ receivable are claims for which formal instruments of credit are issued as evidence of the debt.

The _____ method involves estimating the allowance percentage of receivables and adjusting for bad debts.

Interest is calculated as face value times annual interest rate times _____ in terms of one year.

Accruing interest involves debiting interest receivable and crediting _____ revenue.

Plant assets are resources that have physical substance, are used in operations, and are not intended for _____ to customers.

The Cost Principle requires companies to record plant assets at _____, including all expenditures necessary to acquire and prepare the asset.

_____ is the process of allocating the cost of an asset to expense over its useful life.

The _____ method of depreciation charges an equal amount of depreciation expense for a plant asset each year.

Depreciation Expense is calculated as (cost minus salvage value) divided by the number of _____ in the asset's useful life.

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