Chapter 5 GLOSSARY REVIEW Flashcards
What is the comprehensive income?
An income measure that includes gains and losses that are excluded from the determination of net income.
What is the comprehensive income statement?
A statement that pre- sents items that are not included in the determination of net income, referred to as other comprehensive income.
What is the contra revenue account?
An account that is offset against a revenue account on the income statement.
What is cost of goods sold?
The total cost of merchandise sold during the period.
What is gross profit?
The excess of net sales over the cost of goods sold.
What is gross profit rate?
Gross profit expressed as a percentage by dividing the amount of gross profit by net sales.
What are net sales?
Sales less sales returns and allowances and sales discounts.
What is the periodic inventory system?
An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period.
What is sales invoice?
A document that provides support for each sale.
What are sales returns and allowances?
Transactions in which the seller either accepts goods back from the purchaser (a return) or grants a reduction in the purchase price (an allowance) so that the buyer will keep the goods.
What is sales revenue?
Primary source of revenue for a merchandising company.
What is a sales discount?
A reduction given by a seller for prompt payment of a credit sale.
What is the quality of earnings ratio?
A measure used to indicate the extent to which a company’s earnings provide a full and transparent depiction of its performance; computed as net cash provided by operating activities divided by net income.
What is a purchase return?
A return of goods from the buyer to the seller for cash or credit.
What is a purchase invoice?
A document that provides support for each purchase.
