Practical Business Math Procedures Chapter 7 Discounts: Trade and Cash
Flashcard maker : Lily Taylor
A deduction that a vendor allows on the invoice amount to encourage prompt payment
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*
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
number needed to make up whole force
the amount of time the buyer is allowed in which to pay the seller
a specific number of days during which a discount is available if the account is paid
The date by which an invoice must be paid.
end of credit period
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).
title and ownership of goods stays with the seller until they reach their destination; seller pays for shipping
FOB shipping point
Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
FOB shipping point and FOB destination
an itemized statement of money owed for goods shipped or services rendered
the selling price of something as stated in a catalogue or price list
List price – trade discount amount (ex: $600 list price/30%trade discount rate *1.00 – .30 = .70 then $600 X .70 = $420*)
net price equivalent rate
Term of payment by a supplier which grants a cash discount if a bill paid within a certain number of days.
receipt of good (ROG)
another name for a trade discounts
single equivalent discount rate
single trade discount
terms of the sale
Which of the following would NOT be an insurance risk to consider?
a discount from the list price of a commodity allowed by a manufacturer or wholesaler to a merchant
trade discount rate
The amount of the discount of an item expressed as a percent of the list price.