Chapter 5 Flashcards
Expenses incurred that are not related to marketing the company’s product
Administrative Expenses
The cost of the merchandise inventory that the business has sold to customers
Cost of Goods Sold
The payment terms of a purchase or sale as stated on the invoice
Credit Terms
The buyer takes ownership of the goods at the delivery destination and the seller pays for the freight
FOB Destination
The buyer takes ownership of the goods after the goods leave and the buyer pays the freight
FOB Shipping Point
Transportation cost to shipping goods into to purchaser’s warehouse; freight on purchased goods
Freight In
Transportation cost to ship the goods out of the seller’s warehouse; freight on goods sold
Freight Out
Excess of net sales revenue over cost of goods sold
Gross Profit
Measures the profitability of each sales dollar above the cost of goods sold; Gross Profit/Net Sales Revenue
Gross Profit Percentage
The loss of inventory that occurs because of theft, damage, or errors
inventory Shrinkage
A seller’s request for payment from the purchaser
Invoice
The merchandise that a business sells to customers
Merchandise Inventory
A business that sells merchandise, or goods to customers
Merchandiser
Income statement format that contains subtotals to highlight relationships. Reports gross profit and operating income
Multi-Step Income Statement
Purchases less purchase returns and allowances less purchase discounts
Net Purchases
