Module 5 Flashcards
Merchandising Business:
A business that sells merchandise, or goods
to customers / retailers
Merchandise Inventory:
The merchandise a business sells to customers
Types:
– Wholesaler: sells goods to retailers
– Retailer: sells goods to customers
Vendor:
The individual or business from whom a company purchases goods.
Cost of Goods Sold:
The cost of the merchandise inventory that
the business has sold to customers.
Gross Profit:
The excess of net Sales Revenue over Cost of
Goods Sold.
Sales Revenue – Cost of Goods Sold = Gross Profit
Operating Expenses:
Expenses other than the cost of goods sold incurred in the entity’s ongoing operations.
Liquidity:
A measure of how quickly an item can be converted into cash.
Purchase Discount:
A discount that businesses offer to purchases as an incentive for early payment.
Credit Terms:
The payment terms of purchase or sale as stated on the invoice
Purchase Return:
A situation in which sellers allow purchasers
to return merchandise that is defective,
damaged or otherwise unsuitable
Purchase Allowance:
A deduction from the sales price granted to
the purchaser as an incentive to keep the
goods that are not “as ordered”
Sales Return:
The product is returned and the customer receives his money back.
Purchase Agreement:
Specifies „Free on Board“ (FOB)
‐When title of the goods transfers to the purchaser
‐Who pays the freight costs
FOB Shipping Point:
The buyer takes ownership (title) of the
goods after the goods leave the seller‘s
place of business (shipping point)
• Usually the buyer pays the freight
Freight‐In:
The transportation cost to ship goods into
the purchaser‘s warehouse ‐> Freight on
purchased goods
FOB Destination:
The buyer takes ownership (title) of the
goods at the deleivery destination
point
• Usually the seller pays the freight