ACCT 1100: Chapter 5

Company that buys goods and sells it at a higher price

A _ earns its revenue by selling products, called merchandise inventory or simple inventory

Selling PRICE of merchandise sold by a business is called

Major expense of a merchandiser

When inventory is sold its cost becomes an _ to the seller to match agaithe revenue from sale

• asset

• liability

• expense

Gross margin =

• COGS - Net sales

• Net sales - COGS

• COGS + Net sales

Net sales =

• Sales revenue + Sales discounts

• Sales revenue - Sales returns and allowances + Sales discounts

• Sales revenue - Sales returns and allowances- Sales discounts

Included all goods that the company owns and expects to sell to customers

Perpetual Inventory System

• business keeps a running record of inventory and COGS by updating these accounts every time a purchase, sale, or return occurs

• inventory is counted at least once a year and used for preparation of financial statements

Periodic Inventory System

• business keeps a running record of inventory and COGS by updating these accounts every time a purchase, sale, or return occurs

• inventory is counted at least once a year and used for preparation of financial statements