The cost of the inventory that thee business has sold to customers. Also called cost of sale.
Cost of Sale (COGS)
The cost of the inventory that the business has sold to customers. Also called COGS
The terms of purchase or sale as stated on the invoice. Acommon example is 2/10, n/30
The individual or business that buys goods from a seller.
Free On Board (FOB)
The purchase agreement specifies FOB terms to indicate who pay the freight. FOB terms also determine when title to the good transfer to the purchaser.
Situation in which the buyer takes ownership (title) at the delivery destination point and the seller pays the freight.
FOB Shipping Point
Situation in which the buyer takes ownership (title) to the goods at the shipping point and the buyers pay the freight.
The transportation cost to ship goods INTO the warehouse; therefore, it is freight on purchased goods.
The transportation cost to ship goods OUT of the warehouse; therefore, it is freight on goods sold to a customer.
Expenses incurred that are not related to marketing the company's products.
Excess of net sales revenue over cost ot goods sold. Also called gross profit.
Excessof net sales revenue over cost of goods sold. Also called GROSS MARGIN
Gross Margin Percentage
Gross profit divided by net sales revenue. A measure of profitability. Also called gross profit percentage.
GROSS PROFIT/ NET SALES REVENUE
Gross profit percentage
Gross profit divided by net sales revenue. A measure of profitability. Also called Gross margin percentage
Income from Operations
Gross profit minus operating expense. Also called Operating Income
All the goods that the company owns and expects to sells to customers in the normal course of operations.
Ratio of cost of goods sold divided by average inventory. Measures the number of times a company sells its averagelevel of inventory during a period.
A seller's request for cash from the purchaser.
Businesses that sell merchandise , or goods, to customers.
Consists of buying and selling products rather than services.
Mult-Step Income statement
Format that contains subtotals to highlight significant relationships. in addition to net income, it reports gross profit and operating income
Purchases less purchase discounts and purchase returns and allowances.
Net Sales Revenue
Sales revenue less sales discounts and sales reurns and allowances.
Number of Days in Inventory
Ratio that measure the average number of days that inventory is held by a company.
Expenses, other than cost of goods sold, that are incurred in the entity's major line of business. Examples include rent. depreciation, salaries, wages, utilities, and supplies expense.
Gross profit minus operating expenses. Also called Income from operations.
Other Revenue and expenses
aRevenue and 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
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 inforation to prepare the financial statement.
Perpetual Inventory system
The computerized accounting inventory system in which the business keeps a constant / running record of inventory and cost of goods sold.
An amount granted to the purchaser as an incentive to keep goods that are not "as ordered."
A discount that businesses offer to purchasers as an incentive for early payment
A situation in which businesses allow purchasers to return merchandise that is defective ,damage , or otherwise unsuitable
The amount that a merchandiser earns from selling its inventory . Short name for sales revenue
Reduction in the amount of cash recieved from a customer for early payment . Offered by the seller as an incentive for the purchasers to pay . A contra account to Sales revenue
Sales returns and Allowences
Decreases in seller's 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
The amount that a merchandiser earns from selling its inventory. Also called Sales
Expenses related to marketing amd selling the company's products.
Single -Step Income statement
Format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals
The individual or business from whom a company purchases goods . A merchandising company mainly purchases inventory from vendors.