Chapter 5 Obj 2 Flashcards
Calculate Net Sales Revenue
What is a sales discount?
a price reduction (usually expressed as a percentage of the selling price) that companies may offer to encourage prompt payment
When you expect a customer to takes a sales discount, it should be recorded as BLANK amount.
Net
When you do not expect a customer to take a sales discount, it should be recorded as BLANK amount.
Gross
What is meant by a “trade discount”?
a reduction in the selling price granted by the seller for a certain class of customer, for example customers who purchase goods for resale
What is meant by a “quantity discount”?
a reduction in the selling price, granted by the seller, because costs per unit are less when ordered in larger quantities
What is the notation “n/30”?
gross amount of the invoice (pre-discount amount) must be paid in 30 days.
What would the notation “2/10” indicate?
a 2% discount if paid within 10 days
What is a “sales allowance”?
a customer keeps a product rendered less valuable due to minor defects, arrived late, or in some other way less valuable and should be recorded in the period of the sale
What is the name of the account used for sales returns and sales allowances?
Returns & Allowances Liabilities (normal balance = credit)
