# Practical Business Math Procedures Chapter 7 Discounts: Trade and Cash – Flashcards

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cash discount
A deduction that a vendor allows on the invoice amount to encourage prompt payment
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chain discounts
5/10 on a \$100 list item *\$100 X .05 = \$5.00 then \$95 X .10 = \$9.50 then \$95.00 - 9.50 = \$85.50 net price*
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chain discounts
a series of trade discounts a supplier may offer to sell out a discontinued item or to encourage a customer to place a larger order
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complement
number needed to make up whole force
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credit period
the amount of time the buyer is allowed in which to pay the seller
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discount period
a specific number of days during which a discount is available if the account is paid
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due dates
The date by which an invoice must be paid.
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end of credit period
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end of month (EOM)
Discount date is calculated from the end of the month. With EOM dating, the net period is an additional 20 days. 26th or later is considered the next month. For example, an invoice dated June 11 with terms of 8/10 EOM has a discount date of July 10 (10 days after the end of June).
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FOB destination
title and ownership of goods stays with the seller until they reach their destination; seller pays for shipping
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FOB shipping point
Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
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Freight terms
FOB shipping point and FOB destination
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Invoice
an itemized statement of money owed for goods shipped or services rendered
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List price
the selling price of something as stated in a catalogue or price list
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net price
List price - trade discount amount (ex: \$600 list price/30%trade discount rate *1.00 - .30 = .70 then \$600 X .70 = \$420*)
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net price equivalent rate
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ordinary dating
Term of payment by a supplier which grants a cash discount if a bill paid within a certain number of days.
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receipt of good (ROG)
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series discounts
another name for a trade discounts
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single equivalent discount rate
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terms of the sale