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Acc 201 Chapter 6 final exam

Acc 201 Chapter 6 final exam - Measures how much of every...

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Chapter 6: Sales Revenue FOB Shipping vs. destination point o FOB shipping point : Free on Board at the shipping point – the buyer is paying the freight so they take control when the freight is shipped so they take control when the good are shipped = A Sale. o FOB Destination : Free on Board @ Destination – seller is paying freight so not a sale till the good reaches the destination. Difference between net and gross sales o Net Sales: Net Sales = Sales revenue – Credit card/sales discounts – Sales Returns o Gross Sales: Gross Sales = Net Sales – Cost of good sold Bad Debt Expense (Doubtful Accounts Expense, Uncollectible Accounts Expense, Provision for  Uncollectible Accounts)  -  Expense associated with estimated uncollectible accounts receivable. Allowance for Doubtful Accounts: Contra-asset account containing the estimated uncollectible accounts receivable. Gross Profit Percentage ration –
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Unformatted text preview: Measures how much of every sales dollar is gross profit. It reflects. It reflects a companys ability to charge premium prices and produce good and services at low cost. All other things equal, a higher gross profit results in higher net income. Gross profit percentage = Gross profit / (divide) net sales Receivables Turnover ratio reflects how many times average trade receivables are recorded and collected during a period. A higher ratio, the faster the collection of recievables. A higher ratio benefits the company because it can invest the money collected to ear interest income or reduce borrowings to reduce interest expense. Overly generous payment schedules and ineffective collection methods keep the receivables turnover ratio low. Receivables Turnover ratio = Net Sales/ (divide) Average Net Trade Accounts Receivable...
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