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ACG 2021. Review for Test Two. Chapter 4. Merchandise business Merchandise inventory Asset account Cost of goods sold Expense account Sales Revenue account Sales discount Expense account Sales returns Contra revenue account. Cost of goods sold. Beginning inventory +Purchases
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ACG 2021 Review for Test Two
Chapter 4 • Merchandise business • Merchandise inventory • Asset account • Cost of goods sold • Expense account • Sales • Revenue account • Sales discount • Expense account • Sales returns • Contra revenue account
Cost of goods sold • Beginning inventory • +Purchases • = Total available • - Ending inventory • = Cost of goods sold • Sales – COGS = Gross profit
Transactions • Purchase of merchandise • Merchandise inventory • Accounts payable • Return of merchandise purchased • Accounts payable • Merchandise inventory • Payment within discount • Accounts payable • Merchandise inventory • Cash
Transactions • Sales • Accounts receivable • Sales • Cost of goods sold • Merchandise inventory • Sales returns • Sales returns • Accounts receivable • Merchandise inventory • Cost of goods sold
Transactions • Sales discount • Cash • Sales discount • Accounts receivable
Chapter 5 • Perpetual inventory systems • Effect of incorrect inventory values • Specific identification • FIFO • LIFO • Lower of cost or market
Chapter 6 • Internal controls • What is control environment? • Cash short and over • Expense or revenue account depending on balance at end of year • Cash short • Debit cash short and over for difference • Cash over • Credit cash short and over for difference
Chapter 6 • Petty Cash • Asset account • Reflects original investment in account • Reimbursement • Expenses are debited • Cash credited
Chapter 6 • Bank reconciliation • Outstanding checks • Outstanding deposits • NSF checks • Service charge
Chapter 6 • Entries for bank reconciliation • NSF check • Accounts receivable • Cash • Service charge • Bank charges • Cash • Note collected • Cash • Interest income • Notes receivable