Accounting Terms

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Author:
jmali921
ID:
244097
Filename:
Accounting Terms
Updated:
2013-10-31 18:01:21
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Accounting
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  1. Contra Expense Account
    • An account that is offset against (reduces) an expense account on the income statement
    • Ex. "Purchase and 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 of 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 periodic inventory, it is calculated at the end of the accounting period by deducting ending inventory from the cost of goods available for sale
  6. FOB Shipping Point
    a) who responsible
    b) who pays
    • The buyer is responsible for damage
    • The buyer will pay for the shipping costs of the goods from the shipping point until they arrive at their destination
  7. FOB destination
    a) who is responsible
    b) who pays
    • Seller is responsible for any damage
    • seller will pay for the shipping costs of the goods until they arrive at their destination (normally the buyer's place of business)
  8. Gross Profit Margin
    • Gross Profit expressed as a percentage of sales. 
    • = Gross profit / Net sales
  9. Gross Sales
    Total sales before deducting any sales returns and allowances and sales discounts
  10. Nature
    • A method of organizing expenses on the income statement by way of their natural classification 
    • e.x. salaries, transportation, depreciation, advertising
  11. Profit from operations
    • The results of a company's normal operating activities
    • gross profit - operating expenses
  12. Profit Margin
    • Profit expressed as a percentage of sales 
    • Profit /Net sales
  13. Days in inventory
    • A liquidity measure of the average number of days that inventory is held
    • =365/ inventory turnover ratio
  14. Inventory Turnover
    • A liquidity measure of the number of times, on average, that inventory is sold during the period
    • = Cost of Goods Sold/ Average inventory
  15. Internal Control
    A process designed to help an organization achieve reliable financial reporting, effective and efficient operations, and compliance with relevant laws and regulations
  16. Net Realizable Value (NRV)
    The selling price of an inventory item, less any costs required to make the item saleable
  17. Lower of cost and net realizable value (LCNRV)
    A basis for stating inventory at the lower of tis original cost and its net realizable value at the end of the period

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