Cost of Goods Sold (COGS) p.263
The cost of the inventory that the business has sold to customers. Also called cost of sales
Cost of Sales p.263
The cost of the inventory that the business has sold to customers. Also called cost of goods sold.
Credit Terms p.259
The terms of purchase or sale as started on the invoice . Common example 2/10,n/30
The individual or business that buys goods from a seller.
Free on Board (FOB) p.260
purchase agreement specifies FOB terms to indicate who pays the freight.Also determine when title to goods transfer to purchaser
FOB Destination p. 260
Situation in which the buyer takes ownership (title) at the delivery destination point and seller pays the freight.
FOB shipping Point p. 260
Situation in which the buyer takes ownership (title) to the goods at the shipping point and the buyer pays the freight.
Freight In p. 261
The transportation cost to ship goods INTO the warehouse;therefore it is freight on purchased goods
Freight Out p 261
Transportation cost to ship good OUT of the warehouse therefore it is freight on goods sold to a customer
General Expenses p 271
Expenses incurred that are not related to marketing the company’s products
Gross Margin p 266
Excess of net sales revenue over cost of goods sold. Also called gross profit
Gross Margin Percentage p 274
Gross profit divided by net sales revenue. A measure of profitability. Also called gross profit percentage.
Gross Profit p 266
Excess of net sales revenue over cost of goods sold. Also called gross margin.
Gross Profit Percentage p.274
Gross profit divided by net sales revenue. A measure of profitability. Also called gross margin percentage
Income From Operations p 271
Gross profit minus operating expenses. Also called operating income
Inventory p. 256
All the goods that company owns and expects to sell to customers in the normal course of operations
Inventory Turnover p 274
Ratio of cost of goods sold divided by average inventory. Measure the number of times a company sells its average level of inventory during a period
Invoice p. 258
A seller’s request for cash from the purchaser.
Businesses that sell merchandise, or goods to customers
Merchandising p 256
Consists of buying and selling products rather than services
Multi – Step Income Statement p 273
Format that contains subtotals to highlight significant relationships. In addition to net income it reports gross profit and operating income.
Net Purchases p 304
Purchases less purchase discounts and purchase returns and allowances.
Net Sales Revenue p 265
Sales revenue less sales discounts and sales returns and allowances
Number of Days in Inventory p 265
Ratio that measures the average number of days that inventory is held by a company
Operating Expenses p 262
Expenses other than cost of goods sold that are incurred in the entity’s major line of businesses. Examples include rent, depreciation, salaries,wages,utilities,and supplies expense
Operating Income p 271
Gross profit minus operating expenses. Also called income from operations.
Other Revenue and Expense p 271
Revenue or expense that is outside the normal day to day operations of a business such as a gain or loss on the sale of plant assets.
Periodic Inventory System p 257
A system in which the business does not keep a continuous record of inventory on hand. At the end of the period, the business takes a physical count of on hand inventory and uses this information to prepare the financial statements.
Perpetual inventory System p 258
The computerized accounting inventory system in which the business keeps a constant/running record of inventory and cost of goods sold.
Purchase Allowances p.260
An amount granted to the purchaser as an incentive to keep goods that are not “as ordered.”
Purchase Discount p 259
A discount that businesses offer to purchasers as an incentive or early payment.
Purchase Returns p 260
A situation in which businesses allow purchasers to return merchandise that is defective,damaged or otherwise unsuitable.
Sales p 263
The amount that a merchandiser earns from selling its inventory. Short name for sales revenue
Sales Discount p 265
Reduction in the amount of cash received from a customer for early payment. Offered by the seller as an incentive for the purchasers to pay early. A contra account to sales revenue
Sales Returns and Allowances p 265
Decreases in the sellers receivable from a customers return of merchandise or from granting the customer an allowance from the amount owed to the seller. A contra account to Sales revenue.
Sales Revenue p 263
The amount that a merchandiser earns from selling its inventory. Also called sales.
Selling Expenses p 271
Expenses related to marketing and selling the company’s products.
Single Step Income Statement p 273
Format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals.
Vendor p 257
The individual or business from whom a company purchases goods. A merchandising company mainly purchases inventory from vendors.
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