Solution Manual for Accounting What The Numbers Mean,
13th Edition By David Marshall
What are merchandising firms? - ANSWER:Either
wholesalers - Buy products from manufacturers to sell to retailers
retailers - Buy products from wholesalers or manufacturers and then sell to
individual customers
Merchandising firms have what sections on the Income Statement? - ANSWER:Net
Sales - COGS = Gross profit - Expenses = Net income
What is gross profit on the income statement? - ANSWER:Net sales - cost of goods
sold = Gross Profit
Gross because it is COGS ewww
What is income from operations on the Income statement? - ANSWER:Gross profit -
operating expenses = Income from operations
What is Net Income? - ANSWER:Revenues - Expenses
Net sales - COGS - Expenses -+ other revenue gains or losses
What is Net income in terms of income from operations? - ANSWER:Income from
operations - Other revenue gains and losses
What is the order one more time to get to net income? - ANSWER:Net Sales - Cost of
goods sold = Gross Profit - expenses = net income
What equals merchandise available for sale? - ANSWER:Beginning Inventory + Net
purchases = Merchandise available for sale
What equals COGS? - ANSWER:Merchandise available for sale - ending value of
inventory
What is merchandise available for sale in terms of COGS - ANSWER:COGS + Ending
value of inventory
The Inventory account should include what costs? - ANSWER:All the costs incurred
necessary to ready the goods for sale
Purchase Price
Less - Purchase discounts take
Less - Returns sent back to the vendor
Less - Allowances (price concessions) provided by the vendor
Plus - Freight if the shipping terms are FOB shipping point
= Value of Inventory or Purchases for a given period
, What three things do you less from inventory account - ANSWER:Discounts, Returns,
Allowances
What are allowances in inventory? - ANSWER:Price concessions provided by the
vendor
How do you get Value of Inventory Purchases for a given time - ANSWER:Purchase
Price - Purchase discounts - Returns - Allowances + Freight if FOB shipping point
In the terms 2/10, n/30 what does the 2 mean? - ANSWER:There is a 2% discount
In the terms 2/10, n/30 what does the 10 mean? - ANSWER:The discount is available
for 10 days
In the terms 2/10, n/30 what does the n/30 mean - ANSWER:Net or N is due in 30
days
30 is the credit period
What is FOB? - ANSWER:free on board aka the point of transfer
What is FOB destination? - ANSWER:ownership of the goods remains with the seller
until the goods reach the buyer
What is FOB shipping point? - ANSWER:ownership of the goods passes to the buyer
when the public carrier accepts the goods from the seller
Who pays the transportation costs during FOB shipping point? - ANSWER:The buyer,
they own it once it reaches the shipping point. You debit merchandise inventory, and
then credit cash the amount of shipping.
Who pays for the transportation and how do they enter it for FOB destination? -
ANSWER:The seller has it because they are responsible until it is at the destination.
They would record it by debiting delivery expense and crediting cash.
The buyer includes shipping costs in what - ANSWER:Inventory!!!!!!!
How are issues with the goods received resolved? - ANSWER:Purchase returns -
Merchandise is returned by the purchaser to the supplier
Purchase Allowance - A price reduction to given to the buyer of defective or
unacceptable merchandise
When selling inventory what are the two entries needed? - ANSWER:First Record
Revenue
Then Inventory going to the customer
Ex) Debit accounts receivable and credit sales revenue
Then debit COGS and credit inventory the amount at OUR COST
13th Edition By David Marshall
What are merchandising firms? - ANSWER:Either
wholesalers - Buy products from manufacturers to sell to retailers
retailers - Buy products from wholesalers or manufacturers and then sell to
individual customers
Merchandising firms have what sections on the Income Statement? - ANSWER:Net
Sales - COGS = Gross profit - Expenses = Net income
What is gross profit on the income statement? - ANSWER:Net sales - cost of goods
sold = Gross Profit
Gross because it is COGS ewww
What is income from operations on the Income statement? - ANSWER:Gross profit -
operating expenses = Income from operations
What is Net Income? - ANSWER:Revenues - Expenses
Net sales - COGS - Expenses -+ other revenue gains or losses
What is Net income in terms of income from operations? - ANSWER:Income from
operations - Other revenue gains and losses
What is the order one more time to get to net income? - ANSWER:Net Sales - Cost of
goods sold = Gross Profit - expenses = net income
What equals merchandise available for sale? - ANSWER:Beginning Inventory + Net
purchases = Merchandise available for sale
What equals COGS? - ANSWER:Merchandise available for sale - ending value of
inventory
What is merchandise available for sale in terms of COGS - ANSWER:COGS + Ending
value of inventory
The Inventory account should include what costs? - ANSWER:All the costs incurred
necessary to ready the goods for sale
Purchase Price
Less - Purchase discounts take
Less - Returns sent back to the vendor
Less - Allowances (price concessions) provided by the vendor
Plus - Freight if the shipping terms are FOB shipping point
= Value of Inventory or Purchases for a given period
, What three things do you less from inventory account - ANSWER:Discounts, Returns,
Allowances
What are allowances in inventory? - ANSWER:Price concessions provided by the
vendor
How do you get Value of Inventory Purchases for a given time - ANSWER:Purchase
Price - Purchase discounts - Returns - Allowances + Freight if FOB shipping point
In the terms 2/10, n/30 what does the 2 mean? - ANSWER:There is a 2% discount
In the terms 2/10, n/30 what does the 10 mean? - ANSWER:The discount is available
for 10 days
In the terms 2/10, n/30 what does the n/30 mean - ANSWER:Net or N is due in 30
days
30 is the credit period
What is FOB? - ANSWER:free on board aka the point of transfer
What is FOB destination? - ANSWER:ownership of the goods remains with the seller
until the goods reach the buyer
What is FOB shipping point? - ANSWER:ownership of the goods passes to the buyer
when the public carrier accepts the goods from the seller
Who pays the transportation costs during FOB shipping point? - ANSWER:The buyer,
they own it once it reaches the shipping point. You debit merchandise inventory, and
then credit cash the amount of shipping.
Who pays for the transportation and how do they enter it for FOB destination? -
ANSWER:The seller has it because they are responsible until it is at the destination.
They would record it by debiting delivery expense and crediting cash.
The buyer includes shipping costs in what - ANSWER:Inventory!!!!!!!
How are issues with the goods received resolved? - ANSWER:Purchase returns -
Merchandise is returned by the purchaser to the supplier
Purchase Allowance - A price reduction to given to the buyer of defective or
unacceptable merchandise
When selling inventory what are the two entries needed? - ANSWER:First Record
Revenue
Then Inventory going to the customer
Ex) Debit accounts receivable and credit sales revenue
Then debit COGS and credit inventory the amount at OUR COST
