Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales. The fees associated with credit card sales are periodically recorded as expenses. You just studied 23 terms!
- 1 How are sales to customers using credit cards recorded?
- 2 What is the term applied to the excess of sales over the cost of goods sold?
- 3 Where are selling and administrative expenses found on the multiple step income statement?
- 4 When a sale is made the cost of the inventory sold is debited to?
- 5 How do you record credit card transactions?
- 6 How do you record credit transactions?
- 7 When you express the cost of goods sold as a percentage of net sales this is called?
- 8 Which of the following inventory costing methods uses the cost of the oldest purchases to calculate the cost of goods sold?
- 9 What are the two categories of expenses in merchandising companies?
- 10 What are examples of selling and administrative expenses?
- 11 Is freight in a selling expense?
- 12 What is the major difference between a periodic and perpetual inventory system?
- 13 Is ending inventory a debit or credit?
- 14 Is Accounts Payable a debit or credit?
- 15 Is Accounts Receivable a debit or credit?
How are sales to customers using credit cards recorded?
When a customer makes a purchase, the company must debit the customer’s account and credit the sales account. After submitting credit card receipts totaling $1,000 directly to a credit card company, the company that makes the sale records the entry by debiting accounts receivable and crediting sales.
What is the term applied to the excess of sales over the cost of goods sold?
gross profit. the excess of net sales over the cost of goods sold.
Where are selling and administrative expenses found on the multiple step income statement?
2. Operating Head – Selling and Admin Expenses. The selling and administration expenses. It includes expenses such as rent, advertising, marketing from operating activities are captured in the second section of a multi – step income statement.
When a sale is made the cost of the inventory sold is debited to?
Under the perpetual system, two sets of entries are made whenever merchandise is sold: (1) the sales amount is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to Cost of Goods Sold and is credited to Inventory.
How do you record credit card transactions?
In your journal entry, you must:
- Debit your Cash account in the amount of your Sale – Fees.
- Debit your Credit Card Expense account the amount of your fees.
- Credit your Sales account the total amount of the sale.
How do you record credit transactions?
According to FreshBooks, to properly record credit sales, businesses must record the bad debt expense from uncollectible accounts receivable in the period when the credit sales occur. This is to match an expense with the revenue.
When you express the cost of goods sold as a percentage of net sales this is called?
Gross profit margin is a metric analysts use to assess a company’s financial health by calculating the amount of money left over from product sales after subtracting the cost of goods sold ( COGS ). Sometimes referred to as the gross margin ratio, gross profit margin is frequently expressed as a percentage of sales.
Which of the following inventory costing methods uses the cost of the oldest purchases to calculate the cost of goods sold?
FIFO (First in, First Out) Under the FIFO method, we will use the oldest inventory at the time of the sale first. You must calculate Cost of Goods Sold for each sale individually.
What are the two categories of expenses in merchandising companies?
Unlike expenses for a service company, expenses for a merchandising company are divided into two categories:
- Cost of goods sold – the total cost of merchandise sold during the period.
- Operating expenses – selling and administrative expenses.
What are examples of selling and administrative expenses?
Selling, General & Administrative expenses (SG&A) include all everyday operating expenses of running a business that are not included in the production of goods or delivery of services. Typical SG&A items include rent, salaries, advertising and marketing expenses and distribution costs.
Is freight in a selling expense?
If goods are sold F.O.B. destination, the seller is responsible for costs incurred in moving the goods to their desired destination. Freight cost incurred by the seller is called freight -out, and is reported as a selling expense which is subtracted from gross profit in calculating net income.
What is the major difference between a periodic and perpetual inventory system?
The primary difference between the periodic and perpetual inventory systems is: The perpetual system maintains a continual record of inventory transactions, whereas the periodic system records these transactions only at the end of the period.
Is ending inventory a debit or credit?
Write the amount of the company’s ending inventory in the debit column of the general journal. For instance, a company with $50,000 ending inventory must debit the inventory account for $50,000.
Is Accounts Payable a debit or credit?
In finance and accounting, accounts payable can serve as either a credit or a debit. Because accounts payable is a liability account, it should have a credit balance. The credit balance indicates the amount that a company owes to its vendors.
Is Accounts Receivable a debit or credit?
The amount of accounts receivable is increased on the debit side and decreased on the credit side. When a cash payment is received from the debtor, cash is increased and the accounts receivable is decreased. When recording the transaction, cash is debited, and accounts receivable are credited.