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COGS
The cost of the inventory that thee business has sold to customers. Also called cost of sale.
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Cost of Sale (COGS)
The cost of the inventory that the business has sold to customers. Also called COGS
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Credit Terms
The terms of purchase or sale as stated on the invoice. Acommon example is 2/10, n/30
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Customer
The individual or business that buys goods from a seller.
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Free On Board (FOB)
The purchase agreement specifies FOB terms to indicate who pay the freight. FOB terms also determine when title to the good transfer to the purchaser.
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FOB Destination
Situation in which the buyer takes ownership (title) at the delivery destination point and the seller pays the freight.
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FOB Shipping Point
Situation in which the buyer takes ownership (title) to the goods at the shipping point and the buyers pay the freight.
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Freight In
The transportation cost to ship goods INTO the warehouse; therefore, it is freight on purchased goods.
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Freight Out
The transportation cost to ship goods OUT of the warehouse; therefore, it is freight on goods sold to a customer.
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General Expense
Expenses incurred that are not related to marketing the company's products.
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Gross Margin
Excess of net sales revenue over cost ot goods sold. Also called gross profit.
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Gross profit
Excessof net sales revenue over cost of goods sold. Also called GROSS MARGIN
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Gross Margin Percentage
- Gross profit divided by net sales revenue. A measure of profitability. Also called gross profit percentage.
- GROSS PROFIT/ NET SALES REVENUE
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Gross profit percentage
Gross profit divided by net sales revenue. A measure of profitability. Also called Gross margin percentage
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Income from Operations
Gross profit minus operating expense. Also called Operating Income
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Inventory
All the goods that the company owns and expects to sells to customers in the normal course of operations.
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Inventory Turnover
Ratio of cost of goods sold divided by average inventory. Measures the number of times a company sells its averagelevel of inventory during a period.
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Invoice
A seller's request for cash from the purchaser.
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Merchandiser
Businesses that sell merchandise , or goods, to customers.
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Merchandising
Consists of buying and selling products rather than services.
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Mult-Step Income statement
Format that contains subtotals to highlight significant relationships. in addition to net income, it reports gross profit and operating income
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Net Purchases
Purchases less purchase discounts and purchase returns and allowances.
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Net Sales Revenue
Sales revenue less sales discounts and sales reurns and allowances.
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Number of Days in Inventory
Ratio that measure the average number of days that inventory is held by a company.
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Operating Expense
Expenses, other than cost of goods sold, that are incurred in the entity's major line of business. Examples include rent. depreciation, salaries, wages, utilities, and supplies expense.
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Operating Income
Gross profit minus operating expenses. Also called Income from operations.
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Other Revenue and expenses
aRevenue and Expense that is outside the normal day-to-day operations of a business, such as a gain or loss on the sale of plant assets.
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Periodic Inventory System
A system in which the business does not keep a continuous record of inventory on hand. At the end of the period, the business takes a physical count of on-hand inventory and uses this inforation to prepare the financial statement.
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Perpetual Inventory system
The computerized accounting inventory system in which the business keeps a constant / running record of inventory and cost of goods sold.
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Purchace allowances
An amount granted to the purchaser as an incentive to keep goods that are not "as ordered."
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Purchase discount
A discount that businesses offer to purchasers as an incentive for early payment
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Purchase returns
A situation in which businesses allow purchasers to return merchandise that is defective ,damage , or otherwise unsuitable
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Sales
The amount that a merchandiser earns from selling its inventory . Short name for sales revenue
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Sales disscount
Reduction in the amount of cash recieved from a customer for early payment . Offered by the seller as an incentive for the purchasers to pay . A contra account to Sales revenue
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Sales returns and Allowences
Decreases in seller's receivable from a customers return of merchandise or from granting the customer an allowance from the amount owed to the seller . A contra account to Sales revenue
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Sales revenue
The amount that a merchandiser earns from selling its inventory. Also called Sales
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Selling Expenses
Expenses related to marketing amd selling the company's products.
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Single -Step Income statement
Format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals
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Vendor
The individual or business from whom a company purchases goods . A merchandising company mainly purchases inventory from vendors.
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