Sales Revenue and Cost Analysis

These flashcards cover key concepts related to sales revenue, cost of goods sold, gross and net profit calculations, and inventory valuation methods.

Sales Revenue

Total Sales before any deductions.

Net Sales

The actual revenue a company keeps after deducting returns, allowances, and discounts from gross sales.

Cost of Goods Sold (COGS)

The cost incurred by a business to produce or purchase the goods and services it sells, excluding indirect costs.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, calculated as Net Sales minus COGS.

Gross Profit Ratio

A profitability metric calculated as Gross Profit divided by Net Sales.

Net Profit

The final profit after all expenses are deducted from gross profit.

Net Realisable Value (NRV)

The selling price of inventory minus the costs required to sell it.

Inventory Valuation

The method of valuing inventory at the lower of cost or net realisable value.

Weighted Average Cost

A method to calculate inventory cost that averages the cost of goods available for sale.

Ending Inventory

The valuation of goods unsold at the end of a period.

Total Cost of Goods Available

The sum of beginning inventory total cost and purchases total cost divided by total units available.

Weighted Moving Average

An averaging method that updates the average cost of inventory after each purchase.

Operating Expense Ratio

A measure calculated as operating expense minus depreciation divided by gross operating income.