3. Describe the operating cycle of a merchandiser.
4. What is Cost of Goods Sold (COGS), and where is it reported?
5. How is gross profit calculated, and what does it represent?
6. What are the two types of inventory accounting systems? Briefly describe each.
7. What is an invoice?
8. What account is debited when recording a purchase of inventory when using the
perpetual inventory system?
9. What would the credit terms of "2/10, n/EOM" mean?
10. What is a purchase return? How does a purchase allowance differ from a
purchase return?
11. Describe FOB shipping point and FOB destination. When does the buyer take
ownership of the goods, and who typically pays the freight?
12. How is the net cost of inventory calculated?
13. What are the two journal entries involved when recording the sale of inventory
when using the perpetual inventory system?
14. Under the new revenue recognition standard, how is the sale of inventory
recorded?