Acc Ch. 5

Consists of products, AKA goods, that a company acquires to resell to customers

• Earns net income by buying and seeling merchandise
• AKA wholesalers or retailers

An intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other wholesalers

Intermediary that buys products from manufacturers or wholesalers and sells them to consumers

The expense of buying and preparing the merchaandise

• AKA gross margin
• Equals net sales less cost of goods sold

Products that a company owns and intends to sell

Products a company owns and expects to sell in its normal operations

Continually updates accounting records for merchandising transactions- specifically, for those records of inventory available for sale and inventory sold

Updates the accounting records for merchandise transactions only at the end of the period

Include the amounts and timing of payments from a buyer to a seller

End of month

The amount of time allowed before full payment is due

Sellers can grant this to encourage buyers to pay earlier

A buyer views a cash discount as this

A seller views a cash discount as this

To inform the seller of a debit made to the seller's account in the buyer's records

• Free on board
• determines who pays transportation costs

The information outside the usual general ledger accounts

the loss of inventory and it is computed by comparing a physical count of inventory with recorded amounts

The expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goodds to customers

Support a company's overall operations and include expenses related to accounting, human resource management, and financial management

• A widely used format
• Lists cost of goods sold as another expense and shows only one subtotal for total expenses