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    Acc111 (412) Activity27 Marimon

    Uploaded by

    Donabelle Marimon
    The document defines key terms and concepts related to recording transactions for merchandising businesses using different inventory systems. It provides definitions for accounts like purchases, merchandise inventory, cost of goods sold, and sales. It also defines transportation terms like freight in, freight out, and bills of lading. Inventory systems covered include periodic and perpetual. Other concepts explained are discounts, purchase orders, sales invoices, and distribution costs.

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    © All Rights Reserved
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    Acc111 (412) Activity27 Marimon

    Uploaded by

    Donabelle Marimon
    55 views2 pages
    The document defines key terms and concepts related to recording transactions for merchandising businesses using different inventory systems. It provides definitions for accounts like purchases, merchandise inventory, cost of goods sold, and sales. It also defines transportation terms like freight in, freight out, and bills of lading. Inventory systems covered include periodic and perpetual. Other concepts explained are discounts, purchase orders, sales invoices, and distribution costs.

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    ACC111(412)_ACTIVITY27_MARIMON

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    The document defines key terms and concepts related to recording transactions for merchandising businesses using different inventory systems. It provides definitions for accounts like purchases, merchandise inventory, cost of goods sold, and sales. It also defines transportation terms like freight in, freight out, and bills of lading. Inventory systems covered include periodic and perpetual. Other concepts explained are discounts, purchase orders, sales invoices, and distribution costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    55 views2 pages

    Acc111 (412) Activity27 Marimon

    Uploaded by

    Donabelle Marimon
    The document defines key terms and concepts related to recording transactions for merchandising businesses using different inventory systems. It provides definitions for accounts like purchases, merchandise inventory, cost of goods sold, and sales. It also defines transportation terms like freight in, freight out, and bills of lading. Inventory systems covered include periodic and perpetual. Other concepts explained are discounts, purchase orders, sales invoices, and distribution costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    LET’S CHECK

    Activity 27. Understanding the terms and concepts is your first step in recording transactions involving
    merchandising or trading concern type of business. On the space provided you are required to write the
    correct term as described.

    1. PURCHASES is an account title used to accumulate the goods that are intended for sales during the
    period under the periodic inventory system.

    2. Under periodic inventory system, MERCHANDISE INVENTORY account remain unchanged.

    3. Transportation in or freight in is normally RECORDED to the cost of goods sold.

    4. Net Sales less cost of goods sold equals GROSS PROFIT.

    5. BILL OF LADING is a document prepared by the carrier detailing the terms of delivery.

    6. PURCHASE DISCOUNT incentive offered to customer/buyer to encourage early payment of goods


    bought on credit.

    7. The term “2/10, n/30” means that the buyer may deduct 2% from the invoice price if payment is
    made within 10 days from the DATE OF PURCHASE.

    8. The term freight prepaid or collect will dictate who SHOULDERS the transportation cost.

    9. Under this transportation arrangement the seller is responsible for the transportation costs, this is
    called FREIGHT OUT or TRANSPORTATION OUT or DELIVERY EXPENSE.

    10. When goods in transit are included in the inventory this must be shipped under FOB DESTINATION
    transportation arrangement.

    11. This is a document made by the buyer authorizing the seller to deliver the goods as stated in the
    form. PURCHASE ORDER (PO)

    12. This document is prepared by the seller of goods and sent to the buyer to document items sold is
    called SALES INVOICE.

    13. Under this inventory system, both the sales amount and the cost of goods sold amount are recorded
    every time the items are sold. This is PERPETUAL INVENTORY SYSTEM.

    14. This is a shipping term where the buyer shoulder the shipping costs. FREIGHT IN or
    TRANSPORTATION IN.

    15. This type of transportation arrangement whereby ownership of goods passes to the buyer only when
    the buyer receives the merchandise. FOB SHIPPING POINT.

    16. OFFICIAL RECEIPT is the document evidences the receipt of cash by the seller.

    17. This a document containing details of the goods received from a vendor is called RECEIVING REPORT.

    18. These are expenses incurred in relation to the distribution of the product. DISTRIBUTION COST.

    19. An account title use to record the revenue of a trading concern. SALES.
    20. It is a discount that encourages the customer to buy more because of big discounts from the list
    price. TRADE DISCOUNT.

    21. Periodic inventory system are commonly used by businesses who sell MERCHANDISE
    PRODUCTS/GOODS.

    22. Purchase returns and Allowance is deduction of PURCHASES account.

    23. PERIODIC Inventory system that provide an up-to-date amount of inventory on hand.

    24. DISTRIBUTION COST is a transportation costs that is part of the operating expenses.

    25. Accounting treatment for an FOB destination, freight collect arrangement is THE RECEIVER OF
    GOODS (THE BUYER) PAYS THE FREIGHT CHARGES UPON DELIVERY OF THE GOODS. THE BUYER DOES
    NOT TAKE OWNERSHIP OR LIABILITY FOR THE GOODS UNTIL THE CARGO GETS TO THE BUYER’S
    PREMISES.

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