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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 5-11

Purpose: (L.O. 1 thru 7) This exercise will quiz you about terminology used in this chapter.

A list of accounting terms with which you should be familiar appear below.

Contra revenue account Other revenues and gains
Cost of goods sold Periodic inventory system
FOB destination Perpetual inventory system
FOB shipping point Purchase allowance
Gross profit Purchase discount
Gross profit rate Purchase invoice
Income from operations Purchase return
Multiple-step income statement Sales discount
Net sales Sales invoice
Nonoperating activities Sales returns and allowances
Operating expenses Sales revenue (Sales)
Other expenses and losses Single-step income statement

Instructions

For each item below, enter in the blank the term that is described.

  1. ______________________________________Freight terms indicating that the goods will be placed free on board for the buyer's place of business, and the seller pays the freight costs.
  2. ______________________________________Freight terms indicating that goods are placed free on board the carrier by the seller, and the buyer pays the freight costs.
  3. ______________________________________Primary source of revenue in a merchandising company.
  4. ______________________________________Sales less sales returns and allowances and sales discounts.
  5. ______________________________________The total cost of merchandise sold during the period. A synonymous term is cost of sales.
  6. ______________________________________The excess ...

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