Accounting Definitions

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  1. Contra Expense Account
    • An account that is offset against (reduces) an expense account on the income statement.
    • Ex. "purchase returns and allowances" and "purchase discounts"
  2. Contra Revenue Account
    • An account that is offset against (reduces) a revenue account on the income statement. 
    • Ex. "Sales returns and allowances" and "Sales discounts"
  3. Cost of goods available for sale
    The sum if beginning inventory and the cost of goods purchased
  4. Cost of Goods purchased
    The sum of net purchases and freight in
  5. Cost of goods sold
    • The total cost of merchandise sold during the period. In a perpetual inventory system, it is calculated and recorded for each sale. 
    • In a periodic inventory system, it is calculated at the end of the accounting period by DEDUCTING ending inventory from the cost of goods available for sale.
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Accounting Definitions
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