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    Fundamentals of Accounting II Reviewer

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    Jolina Joy B. Bayaca
    The document discusses accounting concepts related to purchases, inventory, and financial statements. It covers topics like purchase discounts, purchase invoices, inventory, balance sheets, statements of cash flows, and transportation terms. The document provides definitions and explanations of these accounting concepts.

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    © All Rights Reserved
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    Fundamentals of Accounting II Reviewer

    Uploaded by

    Jolina Joy B. Bayaca
    19 views2 pages
    The document discusses accounting concepts related to purchases, inventory, and financial statements. It covers topics like purchase discounts, purchase invoices, inventory, balance sheets, statements of cash flows, and transportation terms. The document provides definitions and explanations of these accounting concepts.

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    ABM II Reviewer

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    The document discusses accounting concepts related to purchases, inventory, and financial statements. It covers topics like purchase discounts, purchase invoices, inventory, balance sheets, statements of cash flows, and transportation terms. The document provides definitions and explanations of these accounting concepts.

    Copyright:

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

    Fundamentals of Accounting II Reviewer

    Uploaded by

    Jolina Joy B. Bayaca
    The document discusses accounting concepts related to purchases, inventory, and financial statements. It covers topics like purchase discounts, purchase invoices, inventory, balance sheets, statements of cash flows, and transportation terms. The document provides definitions and explanations of these accounting concepts.

    Copyright:

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

    FUNDAMENTALS OF ACCOUNTING II REVIEWER TRADE DISCOUNT- is a special discount from

    the published list price offered to sellers to large


    NATURE OF ACCOUNTING FOR buyers.
    MERCHANDISING BUSINESS
    PURCHASE INVOICE TERMS
    GROSS PROFIT= Sales- Cost of Goods Sold
    CASH / COD- this means that payment is
    NET INCOME=Gross profit-generating expense required at the same time the merchandised is
    MERCHANDISE- goods, such as books clothing, delivered
    groceries, or appliances, bought for resale 2/10, n/30- this means 2% discount of the gross
    MERCHANDISE INVENTORY- items of invoice price is allowed if payment is made
    merchandise the business has in stock or on within 10 days after the invoice date, and the
    hand available for sale gross price Is due to 30 days from the invoice
    date
    NET INCOME= fees earned or service income-
    operating expenses STOCKS AND BONDS

    ACCOUNTING FOR PURCHASES STOCK MARKET INDEX- is a measure of a


    portion of the stock market
    PURCHASE- refers to merchandise acquired for
    resale. These are the goods a business buys for e.g; PSE composite index
    the sale pupose of selling them to the -can be a standard by which investors can
    customers compare the performance of their stocks.
    PURCHASE REQUISITION- is a written request BALANCE SHEET AND STATEMENT OF CASH
    that a certain items be ordered. FLOWS
    - They are generally Pre-numbered 1. Reports Assets, Liabilities and equity at
    consecutively to prevent misuse or loss. a specific date.
    2. Provides information about resources,
    PURCHASE INVOICE- is a document that the
    obligations to creditors, and equity in
    seller sends to the buyer that lists the terms and
    net resources
    the quality, description, unit price, value added
    3. Helps in predicting amounts, timing and
    tax and total cost of the items.
    uncertainty of future cash flows
    PURCHASE DISCOUNT- is a discount taken by
    USEFULNESS OF THE BALANCE SHEET
    the buyer for early payment of a purchase made
    on credit. Computing rates of return

    DISCOUNT PERIOD- is the period of time within Evaluating the capital structure
    which an invoice must be paid if the discount is
    to be taken Assess risk and future cash flows

    Analyze the companys


    -Liquidity FREIGHT COLLECT- The buyer deducted the
    price of transportation to seller
    -Solvency
    FREIGHT PREPAID- The seller will add the
    -Financial Flexibility price to buyer
    LIMITATIONS OF THE BALANCE SHEET BAD ORDER
    PURCHASE RETURN AND ALLOWANCES
    Most assets and Liabilities are reported and
    historical cost DEBIT MEMORANDUM- Notify the creditor
    Use of judgements and estimates (BUYER)

    Many items of financial value are CREDIT MEMORANDUM- Value parted with
    committed (Buyer will received) notify the seller.

    CASH AND OTHER ASSETS A COMPANY


    EXPECTS TO
    -Convert into cash
    -Sell or consume

    Either in one year or in the operating cycle


    whichever is longer.

    ASSETS

    NON-CURRENT ASSETS (Long Term


    Investments)

    1. Securities (Bonds, common stock, long


    term notes)
    2. Tangible fixed assets not currently used
    in operations (land held speculation)
    3. Special Funds (sinking fund, pension
    fund, or plant expansion fund)
    4. Non- consolidated subsidiaries

    TRANSPORTATION IN :

    FOB Destination- the seller will paid the


    transportation

    FOB Shipping Point- the buyer will pay the


    transportation

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