Exam3 - Flashcards - The flashcards are formatted for...

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Merchandising Firms Merchandising Firms
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Sell goods for sale. Purchase inventory, which is resold to customers.
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Sale of Inventory Service Firms
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Don’t sell a physical product. Represents an asset (inventory) turning into an expense.
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Sales Revenue Cost of Goods Sold
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Cost of inventory you sell. Revenue on products sold.
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Sales Revenue Increase and Decrease
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When a merchandiser makes a sale of goods, what happens to the assets? Based on the sale price of the inventory sold (# of units * selling price per unit).
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Inventory (on BS) Cost of Goods Sold
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Based on the cost of the inventory sold (# of units * cost per unit). Based on the cost of the goods still on hand at the company (# of units * cost per unit).
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Sales Discounts; Sales Returns and Allowances Sales Discounts; Sales Returns and Allowances
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Reduces balance of revenue account. Contra account for revenue.
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Net Sales Revenue Sales Revenue (Sales Discounts) (Sales Returns and Allowances)
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Formula for Net Sales Revenue: The figure we are concerned with when we discuss a company’s overall “revenue.”
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Revenue - Expenses Gross Profit - Expenses
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Net Income for Merchandising Firms: Net Income for Service Firms:
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Service Firms Perpetual System
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record to show the inventory on hand at all times. No inventory.
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This note was uploaded on 08/30/2011 for the course ACG 2021 taught by Professor Hornik during the Fall '08 term at University of Central Florida.

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Exam3 - Flashcards - The flashcards are formatted for...

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