Chapter 6 Flashcards
What is merchandising inventory?
this is when a merchandising company earns income by buying and selling goods.
What is the perpetual inventory system?
Continuous records are kept of the quantity and usually the cost individual items as they are bought/sold.
What is the periodic inventory system?
Inventory that is not yet sold is counted periodically. There is something called a “physical count” at the end of an accounting period.
How to calculate net sales?
Gross sales - Sales returns & allowances
How to calculate gross margin?
Net sales - COGS
Name two examples of operating expenses.
Selling & General/Administrative expenses
How to solve a single step income statement?
Revenues - Expenses = Net income
What is a trade discount?
A reduction in a item for a specific percentage off.
What does n/10 and n/30 mean ?
N/10 - invoice due in 10 days after invoice date.
N/30 - invoice due in 30 days after invoice date.
What is a purchase discount?
Discounts that the buyer takes for the early payment for merchandise.
Define freight in.
The buyer pays the transportation charge.
