Chapter 5: Merchandising Operations Flashcards
contra revenue account
an account that is offset against a revenue account on the income statement.
cost of goods sold
the total cost of merchandise sole during the period. beginning inventory \+Purchases =cost of good available for sale -ending inventory =COGS
gross profit
the excess of net sales over the cost of goods sold.
net sales/COGS
gross profit rate
gross profit expressed as a percentage by dividing the amount of gross profit by net sales
gross profit/net sale
net sales
sales revenue
less: sales returns & allowances
less: sales discount
=net sales
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.
perpetual inventory system
a detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.
profit margin
measures the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales.
net income/net sales
purchase allowance
a deduction made to the selling price of merchandise, granted by the seller; so that the buyer will keep the merchandise.
purchase discount
a cash discount claimed by a buyer for prompt payment of a balance due
purchase invoice
a document that provides support for each purchase
purchase return
a return of goods from the buyer to the seller for cash or credit
sales discount
a reduction given by a seller for prompt payment of a credit sale
sales invoice
a document that provides support for each sale
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 keeps the goods.
