FABM! 4Q

A type of business that engage in buying and selling of goods or merchandise.

• service

• merchandise

• selling

• franchising

This transaction assumes that the business has a remaining unpaid liability to its supplier after the purchase transaction has been made.

• Partial payment of account with supplier

• Sale of merchandise on account

• Full account with supplier and continue transacting with them

• Cash sales of merchandise

What is meant by Freight?

• It is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer.

• It is a deduction that a payer can take from an invoice amount if payment is made by a certain date.

• It is the transportation cost associated with the delivery of goods from a supplier to the receiving products or goods.

• It is the estimated reduction in value of a fixed assets within a fiscal year.

What is meant by Freight?

• It is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer.

• It is a deduction that a payer can take from an invoice amount if payment is made by a certain date.

• It is the transportation cost associated with the delivery of goods from a supplier to the receiving products or goods.

• It is the estimated reduction in value of a fixed assets within a fiscal year.

Distinguish purchase discount from purchase return

• A purchase discount is a deduction that a buyer can take from purchase of merchandise while purchase return is when the buyer returns merchandise bought to the seller.

• A purchase discount when the buyer return merchandise bought from the seller is while purchase return is a deduction that a buyer can take from purchase of merchandise.

• A purchase discount is a credit because it serves to reduce the total amount of accounts receivable while purchase return is the reduction of purchase price due to early payment.

• A purchase discount is the reduction of purchase price due to early payment while purchase return a credit because it serves to reduce the total amount of accounts receivable.

Annie imports her beauty product in Hongkong. The total cost of the product is P12,345 and the freight incurred is P2,324. How should freight – in be treated in this transaction?

• A deduction to the cost of purchases     

• A deduction to the operating expenses

• An addition to the cost of purchases

• An addition to the operating expenses

Annie sells her product on cash and on account basis. Terms applied are cash: 5%, 2/10, n/30. Decide the best scheme of payment if cash purchase is not possible.

• Pay the product on or before the 10th day to avail the 2% discount.

• Pay the product after 30 days, invest first your money in other businesses.

• Pay the product on the 11^th day since cash purchases is not possible.

• Pay the product on or before the 30^th day to avoid additional payment of interest.

It provides evidence that a business transaction has occurred.

• Business letter

• Business documents

• Credit memo

• Debit memo

A document that is issued by the seller to the buyer to indicate that the merchandise has been delivered and the buyer is requested to pay the amount due.

• Sales Invoice

• Official receipt

• Notes

• Waybill

How does delivery receipt differs from an invoice?

• Delivery receipt triggers the preparation of sales invoice

• Delivery receipt notify the seller that there is a deduction in the accounts receivable

• Delivery receipt notify the seller that there is a deduction in the accounts payable

• Delivery receipt confirms the receipt of merchandise by the buyer