Chapter 5

Question 1

merchandiser

Answer 1

is a business that sells merchandise, or goods, to customers

Question 2

wholesaler

Answer 2

buys goods manufacturer and sells them to retailers

Question 3

retailer

Answer 3

buys merchandise from manufacturers or a wholesaler and then sells the goods to consumers

Question 4

FOB Shipping Point (Freight In)

Answer 4

fright is buyer’s responsibility -becomes part of inventory cost for buyer

Question 5

FOB Destination (Freight Out)

Answer 5

freight is seller’s responsibility - becomes a selling expense for the seller

Question 6

Net Cost of Inventory Purchased

Answer 6

Purchase cost of inventory-Purchase returns and allowances+Freight In

Question 7

Sale Revenue

Answer 7

the amount a business earns from selling merchandise inventory

Question 8

Net Sales Revenue

Answer 8

is the amount a company has earned on sales of merchandise after returns, allowances, and discounts have been taken out

Question 9

Gross Profit

Answer 9

is a measure of business’ success

Question 10

inventory shrinkage

Answer 10

is loss of inventory of inventory occurring from theft, damage and errors