ACING MBA 510 MID TERM EXAM WITH THE LATEST A+
QUESTIONS AND ANSWERS STUDY COMPANION.
This includes amounts of timing of payments and is divided in credit periods
Credit terms
This credit period requires payment within 30 days after invoice date
n/30
This credit period requires payment within 10 days after end of the month and the
invoice is dated
n/10, EOM
This credit period is when a buyer can deduct 2% of invoice if payment is made
within 10 days, but must be done within the invoice period or the payment is due
within 30 days
2/10, n/30
What is the equation of the amount of cash the buyer must pay?
Invoice amount
LESS: Returns and allowances (if any)
= Amount due (if discount not taken)
LESS: Discount (Amount due x Discount %)
= Amount of cash paid
Goods in transit when the ownership transfer at the shipping point and is owned
by the buyer
FOB shipping point
Goods in transit when the ownership transfer at the destination and the goods in
transit is owned by the seller
FOB destination
What two accounts are added to merchandise inventory and what account is
subtracted from merchandise inventory?
Purchases of inventory and transportation-in costs are added
Purchase discounts and purchase returns and allowances are subtracted
, How is the multiple step I/S divided?
1. Gross profit
2. Income from operations
3. Income from non operating activities
Within goods available for sale, inventory is reported as a ______ on the B/S and
COGS is reported as a ________ on the I/S
Asset
Expense
This type of I/S reports gross profit as a separate item
Multiple step I/S
This type of I/S reports net income equal to income from operations adjusted for
any non operating items
Multiple step I/S
This type of I/S commonly reports detailed computations of net sales and other
costs and expenses
Multiple step I/S
This type of I/S reports subtotals for various classes of items
Multiple step I/S
This type of I/S reports COGS before reporting gross profit
Multiple step I/S
This type of I/S is limited to two main categories (revenues and expenses)
Single step I/S
This is a contra asset account with a normal credit balance
Allowance for sales discounts
What is the equation for net sales?
Net sales = Sales - sales discount - sales returns and allowances
What is the equation for gross margin ratio?
Gross margin / Net sales
Inventory items requiring special attention:
QUESTIONS AND ANSWERS STUDY COMPANION.
This includes amounts of timing of payments and is divided in credit periods
Credit terms
This credit period requires payment within 30 days after invoice date
n/30
This credit period requires payment within 10 days after end of the month and the
invoice is dated
n/10, EOM
This credit period is when a buyer can deduct 2% of invoice if payment is made
within 10 days, but must be done within the invoice period or the payment is due
within 30 days
2/10, n/30
What is the equation of the amount of cash the buyer must pay?
Invoice amount
LESS: Returns and allowances (if any)
= Amount due (if discount not taken)
LESS: Discount (Amount due x Discount %)
= Amount of cash paid
Goods in transit when the ownership transfer at the shipping point and is owned
by the buyer
FOB shipping point
Goods in transit when the ownership transfer at the destination and the goods in
transit is owned by the seller
FOB destination
What two accounts are added to merchandise inventory and what account is
subtracted from merchandise inventory?
Purchases of inventory and transportation-in costs are added
Purchase discounts and purchase returns and allowances are subtracted
, How is the multiple step I/S divided?
1. Gross profit
2. Income from operations
3. Income from non operating activities
Within goods available for sale, inventory is reported as a ______ on the B/S and
COGS is reported as a ________ on the I/S
Asset
Expense
This type of I/S reports gross profit as a separate item
Multiple step I/S
This type of I/S reports net income equal to income from operations adjusted for
any non operating items
Multiple step I/S
This type of I/S commonly reports detailed computations of net sales and other
costs and expenses
Multiple step I/S
This type of I/S reports subtotals for various classes of items
Multiple step I/S
This type of I/S reports COGS before reporting gross profit
Multiple step I/S
This type of I/S is limited to two main categories (revenues and expenses)
Single step I/S
This is a contra asset account with a normal credit balance
Allowance for sales discounts
What is the equation for net sales?
Net sales = Sales - sales discount - sales returns and allowances
What is the equation for gross margin ratio?
Gross margin / Net sales
Inventory items requiring special attention:
