ACC 131 Exam 3 Questions and Answers Already Passed Latest Update 2025-2026
cost of goods available for sale - Answers the total cost spent on inventory that was available to
be sold during a period
beginning inventory + cost of goods purchased
Cost of Goods Sold - Answers the total cost of merchandise sold during the period
Beg. inventory + purchases - ending inventory
cost of goods sold model - Answers The formula for calculating cost of goods sold by adding
beginning inventory and purchases and subtracting ending inventory.
Beginning inventory + purchases = Cost of goods available
Cost of goods available - cost of goods sold = ending inventory
Cost of goods available - ending inventory = cost of goods sold
FOB destination - Answers Freight terms indicating that ownership of goods remains with the
seller until the goods reach the buyer.
Seller pays
FOB shipping point - Answers Freight terms indicating that ownership of goods passes to the
buyer when the public carrier accepts the goods from the seller.
Buyer pays
Freight In - Answers cost to transport inventory to the company, which is included as part of
inventory cost
Freight Out - Answers The transportation cost to ship goods out of the seller's warehouse;
therefore, it is freight on goods sold to a customer.
Gross Margin - Answers the amount of money the retailer makes as a percentage of sales after
the cost of goods sold is subtracted
Sales - COGS
inventory - Answers A list of possessions or goods on hand.
, Current Asset
Balance sheet
Debit
net sales - Answers Total sales less sales discount and sales returns and allowances
Operating Cycle - Answers The average time required to purchase inventory, sell it on account,
and then collect cash from customers—that is, go from cash to cash.
purchase allowance - Answers a deduction made to the selling price of merchandise, granted by
the seller, so that the buyer will keep the merchandise
purchase discount - Answers A cash discount claimed by a buyer for prompt payment of a
balance due.
purchase return - Answers a return of goods from the buyer to the seller for cash or credit
purchases - Answers an account used in a periodic inventory system to record acquisitions of
merchandise
sales allowance - Answers credit allowed a customer for part of the sales price of merchandise
that is not returned, resulting in a decrease in the vendor's accounts receivable
sales discount - Answers A cash discount on sales taken by a customer
sales return - Answers any merchandise returned for credit or a cash refund
Specific Identification - Answers the inventory costing method that identifies the cost of the
specific item that was sold
FIFO method - Answers an inventory costing method that assumes that the earliest goods
purchased are the first to be sold
fixed assets - Answers assets that are relatively permanent, such as land, buildings, and
equipment
intangible assets - Answers (e.g., patents, trademarks, copyrights) that have no real physical
form but do have value
land - Answers natural resources that are used to make goods and services
PPE asset
Balance sheet
Debit
cost of goods available for sale - Answers the total cost spent on inventory that was available to
be sold during a period
beginning inventory + cost of goods purchased
Cost of Goods Sold - Answers the total cost of merchandise sold during the period
Beg. inventory + purchases - ending inventory
cost of goods sold model - Answers The formula for calculating cost of goods sold by adding
beginning inventory and purchases and subtracting ending inventory.
Beginning inventory + purchases = Cost of goods available
Cost of goods available - cost of goods sold = ending inventory
Cost of goods available - ending inventory = cost of goods sold
FOB destination - Answers Freight terms indicating that ownership of goods remains with the
seller until the goods reach the buyer.
Seller pays
FOB shipping point - Answers Freight terms indicating that ownership of goods passes to the
buyer when the public carrier accepts the goods from the seller.
Buyer pays
Freight In - Answers cost to transport inventory to the company, which is included as part of
inventory cost
Freight Out - Answers The transportation cost to ship goods out of the seller's warehouse;
therefore, it is freight on goods sold to a customer.
Gross Margin - Answers the amount of money the retailer makes as a percentage of sales after
the cost of goods sold is subtracted
Sales - COGS
inventory - Answers A list of possessions or goods on hand.
, Current Asset
Balance sheet
Debit
net sales - Answers Total sales less sales discount and sales returns and allowances
Operating Cycle - Answers The average time required to purchase inventory, sell it on account,
and then collect cash from customers—that is, go from cash to cash.
purchase allowance - Answers a deduction made to the selling price of merchandise, granted by
the seller, so that the buyer will keep the merchandise
purchase discount - Answers A cash discount claimed by a buyer for prompt payment of a
balance due.
purchase return - Answers a return of goods from the buyer to the seller for cash or credit
purchases - Answers an account used in a periodic inventory system to record acquisitions of
merchandise
sales allowance - Answers credit allowed a customer for part of the sales price of merchandise
that is not returned, resulting in a decrease in the vendor's accounts receivable
sales discount - Answers A cash discount on sales taken by a customer
sales return - Answers any merchandise returned for credit or a cash refund
Specific Identification - Answers the inventory costing method that identifies the cost of the
specific item that was sold
FIFO method - Answers an inventory costing method that assumes that the earliest goods
purchased are the first to be sold
fixed assets - Answers assets that are relatively permanent, such as land, buildings, and
equipment
intangible assets - Answers (e.g., patents, trademarks, copyrights) that have no real physical
form but do have value
land - Answers natural resources that are used to make goods and services
PPE asset
Balance sheet
Debit
