Studied by 0 people
Looks like no one added any tags here yet for you.
merchandising businesses
Companies that buy and resell merchandise inventory.
merchandise inventory
Supply of finished goods held for resale to customers.
retail companies
Companies that sell goods to consumers.
wholesale companies
Companies that sell goods to other businesses.
product costs
All costs related to obtaining or manufacturing a product intended for sale to customers; are accumulated in inventory accounts and expensed as cost of goods sold at the point of sale. For a manufacturing company, product costs include direct materials, direct labor, and manufacturing overhead.
selling and administrative costs
Costs that cannot be directly traced to products that are recognized as expenses in the period in which they are incurred. Examples include advertising expense and rent expense.
period costs
General, selling, and administrative costs that are expensed in the period in which the economic sacrifice is made.
cost of goods available for sale
Total costs paid to obtain goods and to make them ready for sale, including the cost of beginning inventory plus purchases and transportation-in costs, less purchase returns and allowances and purchase discounts.
cost of goods sold
Total cost incurred for the goods sold during a specific accounting period.
gross margin / gross profit
Difference between sales revenue and cost of goods sold; the amount a company makes from selling goods before subtracting operating expenses.
perpetual inventory system
Method of accounting for inventories that increases the Inventory account each time merchandise is purchased and decreases it each time merchandise is sold.
cash discount
Discount offered on merchandise sold to encourage prompt payment; offered by sellers of merchandise and represents sales discounts to the seller when they are used and purchase discounts to the purchaser of the merchandise.
2/10, n/30
Expression meaning the seller will allow the purchaser a 2 percent discount off the gross invoice price if the purchaser pays cash for the merchandise within 10 days from the date of purchase.
purchase discount
Reduction in the gross price of merchandise extended under the condition that the purchaser pay cash for the merchandise within a stated time (usually within 10 days of the date of the sale).
purchase returns
A reduction in the cost of purchases resulting from dissatisfaction with merchandise purchased.
purchase allowances
A reduction in the cost of purchases resulting from dissatisfaction with merchandise purchased.
FOB (free on board) shipping point
Term that designates the buyer as the responsible party for freight costs (transportation-in costs).
FOB (free on board) destination
Term that designates the seller as the responsible party for freight costs (transportation-in costs).
transportation-in (freight-in)
Cost of freight on goods purchased under terms FOB shipping point that is usually added to the cost of inventory and is a product cost.
transportation-out (freight-out)
Freight cost for goods delivered to customers under terms FOB destination; a period cost expensed when it is incurred.
shrinkage
A term that reflects decreases in inventory for reasons other than sales to customers.
gain
Increase in assets or decrease in liabilities that results from peripheral or incidental transactions.
loss
Decrease in assets or increase in liabilities that results from peripheral or incidental transactions.
operating income (or loss)
Income statement subtotal representing the difference between operating revenues and operating expenses, but before recognizing gains and losses from peripheral activities which are added to or subtracted from operating income to determine net income or loss.
multistep income statement
Income statement format that matches particular revenue items with related expense items and distinguishes between recurring operating activities and nonoperating items such as gains and losses.
single-step income statement
Single comparison between total revenues and total expenses.
sales discount
Cash discount extended by the seller of goods to encourage prompt payment. When the buyer of the goods takes advantage of the discount to pay less than the original selling price, the difference between the selling price and the cash collected is the sales discount.
sales returns and allowances
A reduction in sales revenue resulting from dissatisfaction with merchandise sold.
net sales
Sales less returns from customers and allowances or cash discounts given to customers.
