Term
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Definition
| Price reduction on merchandise sold offered by sellers to encourage prompt payment; when taken, represents a sales discount to the seller and a purchase discount to the buyer of the merchandise |
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Term
| Common Size financial Statements |
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Definition
| Financial statements in which dollar amounts are converted to percentages to aid in comparing financial data among periods and among companies |
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Term
| Cost of Goods Available for Sale |
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Definition
| Total costs paid to obtain goods and ready them for sale, including the cost of beginning inventory plus purchases and transportation-in costs, less purchase returns and allowances and purchase discounts |
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Term
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Definition
| Total costs incurred for the goods sold during a specific accounting period |
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Term
| FOB (free on board) Shipping Point |
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Definition
| Shipping term that the buyer bears the freight costs |
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Term
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Definition
| increases in assets or decreases in liabilities that result from peripheral or incidental transactions |
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Term
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Definition
| Difference between sales revenue and cost of goods sold; the amount a company makes from selling goods before subtracting operation expenses |
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Term
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Definition
| Expressing gross margin as a percentage of sales by dividing gross margin by net sales; the amount of each dollar of sales that is profit before deducting any operating expense |
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Term
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Definition
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Term
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Definition
| Decreases in assets or increases in liabilities that result from peripheral or incidental transactions |
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Term
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Definition
| Finished goods held for resale to customers |
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Term
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Definition
| Companies that buy and resell merchandise inventory |
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Term
| Multistep income statement |
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Definition
| An income statement that has more than one subtraction in arriving at net income. An income statement showing gross profit is an indication it is a multiple-step income statement. |
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Term
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Definition
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Term
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Definition
| Sales less returns from customers and allowances or cash discounts granted to customers |
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Term
| Operating Income (or Loss) |
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Definition
| Income after subtracting operating expenses from operating revenues. Gains and losses and other peripheral activities are added to or subtracted from operating income to determine net income or loss |
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Term
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Definition
| Expenses recognized in the period in which they are incurred regardless of when cash payments for them are made; costs that cannot be directly traced to products |
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Term
| Periodic Inventory System |
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Definition
| Method of accounting for inventory that requires a physical count of goods on hand at the end of the accounting period in order to determine the amount of cost of goods sold and to update the Inventory account |
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Term
| Perpetual Inventory System |
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Definition
| Method of accounting for inventory in which the amount of cost of goods sold is recorded for each sale of inventory; the Inventory account is increased and decreased with each purchase and sale of merchandise |
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Term
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Definition
| All costs directly traceable to acquiring inventory and getting it ready for sale, including transportation-in. Contrast with selling and administrative costs |
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Term
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Definition
| Reduction in the gross price of merchandise offered to a buyer if the buyer pays cash for the merchandise within a stated time |
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Term
| Purchase Returns and Allowances |
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Definition
| A reduction in the cost of purchases resulting from dissatisfaction with merchandise purchased |
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Term
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Definition
| Businesses that sell merchandise directly to consumers |
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Term
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Definition
| Profitability measure that reflects the percent of net income each sales dollar generates; computed by dividing net income by net sales. Also called net income percentage |
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Term
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Definition
| Cash discount offered by the seller of merchandise to encourage a customer to pay promptly |
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Term
| Sales Returns and Allownances |
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Definition
| A reduction in sales revenue resulting from dissatisfaction with merchandise sold |
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Term
| Schedule of Costs of Goods Sold |
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Definition
| Internal report used with the periodic inventory system that reflects the computation of cost of goods sold |
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Term
| Selling and administrative Costs |
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Definition
| Costs such as advertising expense and rent expense that cannot be directly traced to inventory; recognized as expenses in the period in which they are incurred. Contrast with product costs |
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Term
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Definition
| Decreases in inventory for reasons other than sales to customers |
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Term
| Single-Step income statement |
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Definition
| income statement format which presents net income in one step, the difference between total revenue and total expenses. Contrast with multi-step income statement |
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Term
| Transportation-In (Freight-In) |
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Definition
| Cost of freight of goods purchased under FOB shipping point terms; A product cost usually added to the cost of inventory |
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Term
| Transportation-Out (Freight-Out) |
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Definition
| Freight cost for goods delivered to customers under FOB destination terms; a period cost expensed when incurred |
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Term
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Definition
| Common payment terms indicating the seller is offering the purchaser a 2% discount off the gross invoice price if the purchaser pays the reduced amount in cast within 10 days form the merchandise purchase date |
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Term
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Definition
| Companies that sell goods to other businesses |
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