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ADM 1340 Lecture Notes - Lecture 5: Gross Profit, Gross Margin, Uptodate

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burgundymouse176
26 Apr 2017
School
University of Ottawa
Department
Administration
Course
ADM 1340
Professor
Lamia Chourou

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ADM 1340 Full Course Notes
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ADM 1340 Full Course Notes
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Document Summary

Merchandising involves purchasing products (inventory) to resell to customers. A merchandising company keeps track of its inventory to determine what is available for sale (inventory) and what has been sold (cost of goods sold) Two systems to account for inventory: perpetual , periodic , perpetual, detailed records of the cost of each inventory purchase and sale are maintained , cost of goods sold is determined each time a sale occurs. Cash or a/p: gst, pst, hst, do not form part of the cost of the merchandise, freight costs , costs of transporting the goods to the (cid:271)uyers" pla(cid:272)e of (cid:271)usiness, freight terms state who pays the freight charges. No journal entry for the seller: purchase returns and allowances. Purchase return: the buyer returns the goods to the seller and receives a cash refund or credit. Purchase allowance : the seller gives an allowance (deduction ) from the purchase price.

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Related Questions

Which of the following is a characteristic of a perpetual inventory system?

  1. Inventory purchases are debited to the inventory

  2. Inventory records are not kept for every item

  3. Cost of goods sold is recorded for each sale

  4. Cost of goods sold is determined as the number of purchases

Which of the following statements about a periodic inventory system is true?

  1. Companies continuously maintain detailed records of the cost of each inventory purchase and sale.
  2. The periodic system provides better control over inventories than a perpetual system.
  3. Companies determine cost of goods sold only at the end of the accounting period.
  4. The increased use of computerized systems has increased the use of the periodic system.

Which of the following statements about a periodic inventory system is true?

a. The increased use of computerized systems has increased the use of periodic systems.

b. The periodic system provides better control over inventories than a perpetual system

c. The company continuously maintained detailed records of the cost of each purchase and sale.

d. Companies determine the cost of goods sold only at the end of the accounting period.