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Accounting Ch 5
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Cost of goods sold
The total cost of merchandise sold during the period.
This expense is directly related to the revenue recognized from the sale
of goods
Perpetual Inventory System
A detailed inventory system in which a company maintains the cost of
each inventory item and the records continuously show the inventory that
should be on hand.
Periodic Inventory System
An inventory system in which a company does not maintain detailed
records of goods on hand and determines the cost of goods sold only at
the end of an accounting period.
FOB shipping point
means that the seller places the goods free on board the carrier, and
the
buyer pays the freight costs.
FOB destination
means that the seller places the goods free on board to the buyer's
place of business, and the
seller pays the freight.
Purchase discount
A cash discount claimed by a buyer for prompt payment of a balance
due.
The credit terms of a purchase on account may permit the buyer to claim a
cash discount for prompt payment. The buyer calls this cash discount a purchase
discount. This incentive offers advantages to both parties
: The
purchaser saves money, and the seller is able to shorten the operating
cycle by converting the accounts receivable into cash earlier.
Author
slone3000
ID
20205
Card Set
Accounting Ch 5
Description
Ch 5
Updated
2010-05-21T21:47:42Z
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