Trading stock - 9 Flashcards
What is a service business?
Business that provides a service in exchange for money for example a lawyer
What is a trading business?
We sell stock and good for a profit. Called retailers or merchandises. Such as what was Andy iStore
What is contract of purchase?
any time that Good I bought and sold contract of purchase and sale.
what happens in every sale transaction?
One party is the buyer and one party is the seller
What are the four agreements in the contract of purchase and sale?
- Price
- Produce
- Place
- Promotion which is ad
What are the three sections of a profit?
1. cost of service
2. profit markup
3. sales (selling price)
What is trading stock?
The good is that a business hours to other businesses or consumers
What is trading stock?
The goods that a business sells to other businesses or consumers. It is an asset sold 
What is trading stock also known as?
Goods, products, stock, inventory, merchandise
Do businesses manufacture their own trading store?
Many businesses do not manufacture their own trading stock but this out to the final consumer
Who do businesses sell their goods to you?
Wholesaler or retailer
Who do the retailers sell their goods to?
Consumers
When a wholesaler to retailer buys good from the manufacturer what should I buy it in?
In cash or on credit
Why does the manufacturer prefer to receive cash?
To use the money to pay off debts
Why does the wholesaler prefer on credit?
They have time to get the cash from the customers and pay back the amount
Why will the wholesaler negotiate with the manufacturer?
In terms of purchases
What is the simplest purchase?
Cash purchase
Why can the buyer request a cash discount?
Is the Salah gets paid immediately
If products do not sell what happens when you bought it on credit ?
On credit may not get paid back all the money if the products do not sell
What are the different types of cash purchases?
Cash with order and cash on delivery
What is cash with order?
C.W.O - Money will be paid when the order is placed
What is cash on delivery?
C.O.D - Money will be paid when goods are delivered
What is a debit card?
Combined mean afraid of credit card and cash. Money is Directly taken off the current account and the seller receive the money immediately. Cannot spend more than already in the account. Bank charges are lower
What is the advantage of debit cards?
The item is already paid for. There is no date for the end of the month
What are electronic fund transfers?
Common payment in business. Can you log into the bank account online and Internet transfer funds. Easy to do payment. Any time during the day and it is quicker
What is a credit card?
Issued by Ben to a personal business. Credit card holder will purchase items from a supplier and the bank transfer is fine after transaction. At the end of the month bank issues a credit card statement to the account holder. High interest rates are charged by bank if they can’t not settled in full. Considered a cash sale as the cell receives money on this immediately
What is a retail business?
Business that sells goods and not services
what can sales occur for?
Sales can occur for cash or on credit
What is trading stock bought at?
Cost price
How long is the general ledger valid for?
One month
How many sections is the general ledger split into?
Two sections
What are the sections in the general ledger?
- Balance sheet section
- Nominal Accounts section
What accounts are found in the balance sheet section?
Owner’s equity, fixed assets, current assets and liabilities
What accounts are found in the nominal accounts section?
Income and expenses
Why does cost of sales not effect the bank in the general ledger?
Record of value of stock that has been sold
What happens to the cost of sales in the general ledger?
Debited with details of trading stock
What happens to the trading stock account in the general ledger?
Credited with details of cost of sales
Why must you not draw a line under underneath the total in the general ledger?
Acts as opening total for next month
When are balances and totals brought down?
At the beginning of each month
What is the balance called in the Balance Sheet Section?
Balances
What is the balance called in the Nominal Accounts Section?
Totals
