Accounting Merchandising Operations Chap 5 – Flashcards
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Cost of Goods Sold (COGS) p.263
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The cost of the inventory that the business has sold to customers. Also called cost of sales
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Cost of Sales p.263
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The cost of the inventory that the business has sold to customers. Also called cost of goods sold.
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Credit Terms p.259
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The terms of purchase or sale as started on the invoice . Common example 2/10,n/30
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Customer p.257
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The individual or business that buys goods from a seller.
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Free on Board (FOB) p.260
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purchase agreement specifies FOB terms to indicate who pays the freight.Also determine when title to goods transfer to purchaser
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FOB Destination p. 260
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Situation in which the buyer takes ownership (title) at the delivery destination point and seller pays the freight.
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FOB shipping Point p. 260
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Situation in which the buyer takes ownership (title) to the goods at the shipping point and the buyer pays the freight.
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Freight In p. 261
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The transportation cost to ship goods INTO the warehouse;therefore it is freight on purchased goods
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Freight Out p 261
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Transportation cost to ship good OUT of the warehouse therefore it is freight on goods sold to a customer
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General Expenses p 271
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Expenses incurred that are not related to marketing the company's products
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Gross Margin p 266
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Excess of net sales revenue over cost of goods sold. Also called gross profit
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Gross Margin Percentage p 274
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Gross profit divided by net sales revenue. A measure of profitability. Also called gross profit percentage.
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Gross Profit p 266
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Excess of net sales revenue over cost of goods sold. Also called gross margin.
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Gross Profit Percentage p.274
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Gross profit divided by net sales revenue. A measure of profitability. Also called gross margin percentage
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Income From Operations p 271
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Gross profit minus operating expenses. Also called operating income
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Inventory p. 256
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All the goods that company owns and expects to sell to customers in the normal course of operations
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Inventory Turnover p 274
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Ratio of cost of goods sold divided by average inventory. Measure the number of times a company sells its average level of inventory during a period
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Invoice p. 258
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A seller's request for cash from the purchaser.
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Merchandisers p.256
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Businesses that sell merchandise, or goods to customers
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Merchandising p 256
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Consists of buying and selling products rather than services
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Multi - Step Income Statement p 273
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Format that contains subtotals to highlight significant relationships. In addition to net income it reports gross profit and operating income.
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Net Purchases p 304
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Purchases less purchase discounts and purchase returns and allowances.
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Net Sales Revenue p 265
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Sales revenue less sales discounts and sales returns and allowances
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Number of Days in Inventory p 265
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Ratio that measures the average number of days that inventory is held by a company
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Operating Expenses p 262
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Expenses other than cost of goods sold that are incurred in the entity's major line of businesses. Examples include rent, depreciation, salaries,wages,utilities,and supplies expense
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Operating Income p 271
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Gross profit minus operating expenses. Also called income from operations.
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Other Revenue and Expense p 271
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Revenue or expense that is outside the normal day to day operations of a business such as a gain or loss on the sale of plant assets.
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Periodic Inventory System p 257
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A system in which the business does not keep a continuous record of inventory on hand. At the end of the period, the business takes a physical count of on hand inventory and uses this information to prepare the financial statements.
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Perpetual inventory System p 258
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The computerized accounting inventory system in which the business keeps a constant/running record of inventory and cost of goods sold.
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Purchase Allowances p.260
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An amount granted to the purchaser as an incentive to keep goods that are not "as ordered."
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Purchase Discount p 259
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A discount that businesses offer to purchasers as an incentive or early payment.
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Purchase Returns p 260
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A situation in which businesses allow purchasers to return merchandise that is defective,damaged or otherwise unsuitable.
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Sales p 263
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The amount that a merchandiser earns from selling its inventory. Short name for sales revenue
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Sales Discount p 265
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Reduction in the amount of cash received from a customer for early payment. Offered by the seller as an incentive for the purchasers to pay early. A contra account to sales revenue
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Sales Returns and Allowances p 265
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Decreases in the sellers receivable from a customers return of merchandise or from granting the customer an allowance from the amount owed to the seller. A contra account to Sales revenue.
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Sales Revenue p 263
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The amount that a merchandiser earns from selling its inventory. Also called sales.
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Selling Expenses p 271
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Expenses related to marketing and selling the company's products.
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Single Step Income Statement p 273
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Format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals.
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Vendor p 257
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The individual or business from whom a company purchases goods. A merchandising company mainly purchases inventory from vendors.
