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Universities » University of Mississippi (UM) » Accy - Accountancy » 201 - Introduction to Accounting.. » Flash Cards

Accy Test 2, Study Guide - Flashcards

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Class:Accy 201 - Introduction to Accounting Principles I
Subject:Accountancy
University:University of Mississippi Main Campus
Term:Fall 2010
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Merchandiser Earns net income by buying and selling merchandise
Merchandise Consists of products, also called goods, that a company acquires to sell to a customer
Wholesaler An intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other whole salers
Retailer An intermediary that buys products from manufacturers or wholesalers and sells them to consumers
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What type of account is Merchandise Inventory? A current asset
Perpetual Inventory System Continually updates accounting records for merchandising transactions, specifically for those records of inventory available for sale and inventory sold
Periodic Inventory System Updates accounting records for merchandise transactions only at the end of a period
Journal: Purchasing Inventory on account Dr. Merchandise Inventory, Cr. accts payable
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Journal: Purchase returns and allowances on account Allowances: Dr accounts payable and cr Merch inventory, Returns: dr accounts payable and cr merch inventory
Journal:Payment on Purchase Dr Accounts payable and merchandise inventory and cr cash
What are the two systems in which inventory can be maintained? Periodic and perpetual
Perpetual System: What are the 4 methods? Weighted average, LIFO, FIFO, Specific identification
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When do you use specific Identification? When each item in inventory can be identified with a specific purchase and invoice, usually only practical for companies with expensive hand made inventory
Under FIFO: what is sold first, and what is left? Old is sold first, new is left
Under LIFO: what is sold first and what is left? Sell the new stuff first, old is left
How do you calculate the weighted average cost per unit COGAS (cost of goods available for sale) / units available
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How do you compute COGAS? Beginning inventory + cost of goods purchased
Cash a necessary asset of every company (cash, checking, savings accounts)
Cash equivalents assets similar to cash, short term, 2 criteria: 1) readily convertible to a cash amount, 2) close to their due date so that market value is not sensitive to interest rate changes
What type of account is petty cash? an asset
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When do you debit petty cash? When establishing an account or adding to petty cash
When do you credit petty cash? When removing funds from petty cash
Shortage (on a Cash Short or Over) gets Debited
Over ( on a Cash Short or Over) gets Credited
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 MerchandiserEarns net income by buying and selling merchandise
 MerchandiseConsists of products, also called goods, that a company acquires to sell to a customer
 WholesalerAn intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other whole salers
 RetailerAn intermediary that buys products from manufacturers or wholesalers and sells them to consumers
 What type of account is Merchandise Inventory?A current asset
 Perpetual Inventory SystemContinually updates accounting records for merchandising transactions, specifically for those records of inventory available for sale and inventory sold
 Periodic Inventory SystemUpdates accounting records for merchandise transactions only at the end of a period
 Journal: Purchasing Inventory on accountDr. Merchandise Inventory, Cr. accts payable
 Journal: Purchase returns and allowances on accountAllowances: Dr accounts payable and cr Merch inventory, Returns: dr accounts payable and cr merch inventory
 Journal:Payment on PurchaseDr Accounts payable and merchandise inventory and cr cash
 What are the two systems in which inventory can be maintained?Periodic and perpetual
 Perpetual System: What are the 4 methods?Weighted average, LIFO, FIFO, Specific identification
 When do you use specific Identification?When each item in inventory can be identified with a specific purchase and invoice, usually only practical for companies with expensive hand made inventory
 Under FIFO: what is sold first, and what is left?Old is sold first, new is left
 Under LIFO: what is sold first and what is left?Sell the new stuff first, old is left
 How do you calculate the weighted average cost per unitCOGAS (cost of goods available for sale) / units available
 How do you compute COGAS?Beginning inventory + cost of goods purchased
 Casha necessary asset of every company (cash, checking, savings accounts)
 Cash equivalents assets similar to cash, short term, 2 criteria: 1) readily convertible to a cash amount, 2) close to their due date so that market value is not sensitive to interest rate changes
 What type of account is petty cash?an asset
 When do you debit petty cash?When establishing an account or adding to petty cash
 When do you credit petty cash?When removing funds from petty cash
 Shortage (on a Cash Short or Over) getsDebited
 Over ( on a Cash Short or Over) getsCredited
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