Accounting for Sales and Sales Returns

Vocabulary flashcards based on Chapter 12: Sales and Sales Returns, covering coding systems, transaction processing, and general ledger recording.

Gourmet Supplies Sales Categories

The classification of sales into Crockery (C), Glassware (G), Electrical appliances (E), and Sundry (S).

Gourmet Supplies Sales Tax Rate

The fixed rate of sales tax applied to all company supplies, which is $20\%$.

Code

A system of symbols designed to be applied to a classified set of items to give a brief accurate reference, facilitating entry, collection and analysis.

Sequence codes

Codes that make no attempt to classify an item but simply assign the next available number in a rising sequence; suitable for document numbering like invoices.

Block codes

A coding system that provides a different sequence for each different group of items, such as dividing customers by geographical area.

Significant digit codes

Codes that incorporate one or more digits which are part of the description of the item being coded, such as using digits to represent the wattage of light bulbs.

Hierarchical codes

Codes allocated on the basis of a tree structure where the interrelationship between items is of paramount importance, such as the Universal Decimal Code.

Faceted codes

Codes made up of sections where each section represents a different feature (facet) of the item, such as size, garment type, and color.

Sales Order Processing (SOP) system

A system used to key in and record customer order details, which can produce order acknowledgments and track goods until the sales invoice is generated.

Receivables ledger

A ledger consisting of individual accounts for each credit sale customer, where each customer is identified by a unique code number.

Receivables general ledger account

An account maintained in the general ledger to record the total amount owed by credit customers, representing an asset to the business.

Sales account

A general ledger account used to record income from the amount of sales a business is making.

Sales tax general ledger account

An account used to track output tax collected from customers, representing a liability owed to the authorities.

Output tax

The sales tax collected by a business from its customers which must be accounted for to the authorities.

Sales returns account

An account used to record the reversal of sales transactions when goods are returned, typically resulting in a debit balance.