Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following occurs when finished jobs are shipped to customers?

Work in process inventory increases.

Raw materials inventory decreases.

Net sales are recognized as revenue.

Accounts payable is credited.

Previous problemNext problem

Verified step by step guidance

Understand the context: The question is about the accounting treatment when finished jobs are shipped to customers. This involves recognizing revenue and the impact on various accounts in the financial statements.

Step 1: Recognize revenue. When finished goods are shipped to customers, the company recognizes revenue. This is recorded by crediting the 'Sales Revenue' account, as the company has earned income from the sale.

Step 2: Record the reduction in inventory. The finished goods inventory decreases because the goods have been shipped to customers. This is recorded by crediting the 'Finished Goods Inventory' account.

Step 3: Record the cost of goods sold (COGS). The cost associated with producing the goods is transferred from inventory to the 'Cost of Goods Sold' account. This is recorded by debiting the 'COGS' account.

Step 4: Update accounts receivable or cash. If the customer pays immediately, the 'Cash' account is debited. If the customer is billed, the 'Accounts Receivable' account is debited to reflect the amount owed by the customer.