Accounting Chapter 5

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5 Terms

1
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earns revenue by buying and selling goods

goods are called “Inventory”

Retail Business

2
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Discount for early payment by buyer when purchasing inventory from wholesaler or manufacturer

Purchases Discount

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Perpetual

Recording a Sale

  • Requires two entries

  1. Record the Sale

  2. Update Inventory (perpetual system)


Sales Transactions

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Discounts offered when selling inventory to buyer

Sales Discounts

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  • Purchaser notifies Seller there is a problem (Debit Memo)

  • Seller instructs Purchaser to scrap/return inventory

  • Seller issues refund/Credit Memo to Purchaser


Returns and Allowances - Seller