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Compound Journal entry

a journal entry affecting more than two accounts; an entry that has more than one debit and more than one credit

cost of goods sold

the cost of the inventory that the business has sold to customers

Credit memorandum

a document that supports the return of goods from the customer and the adjustment to the customers account balance

credit terms

the payment terms for customers who buy on account

Debit memorandum

a document that supports the return of goods to the supplier and the adjustment to the balance owed to the supplier

Discount period

period in which the buyer can make early payment for a purchase and receive a discount on that purchase

eom

Credit term specifying that payment for a purchase is due by the end of the month.

FOB destination

shipping term specifying that title to goods passes to the buyer when the goods are received at buyers destination; thus the seller pays the cost of shipping the goods to this destination

FOB shipping point

Shipping term specifying that title to good passes to the buyer when the goods are shipped at the sellers place of business; thus, the buyer pays the cost of shipping the goods to its location

Freight

the cost of shipping merchandise from the seller to the buyer

General and administrative expenses

office expenses, such as the salaries of the company president and office employees, depreciation of items used in administration, rent, utilities, and property taxes on the office building

Gross margin

net sales revenue minus cost of goods sold. also called gross profit

Gross margin percentage

a measure of profitibility equal to gross margin divided by net sales revenue. also called gross profit percentage

gross profit

net sales revenue minus cost of goods sold. also called gross margin

Gross profit percentage

a measure of profitibility equal to gross profit divided by net sales revenue. also called gross margin percentage

Income from operations

gross profit minus operating expenses. also called operating income

Inventory

all the goods purchases for resale to customers in the norma course of merchandising operation. also called merchandise inventory

Inventory turnover

the ratio of cost of goods sold to average inventory. measures the number of times a company sells its average level of inventory during a year

merchandise inventory

all the goods purchases for resale to customers in the normal course of merchandising operations. also called inventory

Multistep income statement

income statement format that calculates net income or net loss by listing important subtotals such as gross profit and operating income.

n/30

credit term specifying that payment for a purchase is due within 30 days after the date of the invoice

n/eom

credit term specifying that payment for a purchase is due by the end of the month. also referred to as eom.

net sales revenue

sales revenue less sales discounts and sales returns allowances

Operating expenses

expenses of operating a business other than cost of goods sold. examples include depreciation, rent, salaries, utilities, advertising, delivery expense, property taxes and supplies expense.

Operating income

gross profit minus operating expenses. also called income from operations

other revenues and expenses

revenues and expenses that fall outside the main operations of a business, such as interest expense and a loss on the sale of long-term assets

Periodic inventory system

an inventory system in which the business does not keep a continuous record of inventory on hand. at the end of the period, a physical count of inventory is taken and determines the inventory owned as well as the cost of the good sold

Perpetual inventory system

an inventory system in which the business keeps a continuous record of inventory owned and the cost of the goods sold

Purchase discount

discount received on purchase by paying early cash within a discount period

Purchase returns and allowances

a reduction in the amount owed for a purchase from returning merchandise or acceping damaged goods

Sales discount

discount granted on sales for the customers early payment with a discount period; a contra account to Sales Revenue

Sales invoice

a bill that documents the sale of goods to a business customer

sales returns and allowances

a reduction in the amount of customer sales from returning merchandise or accepting damaged goods; a contra-account to Sales Revenue

Sales revenue

the amount that a retailer earns from selling its inventory

Selling expenses

Expenses related to advertising and selling products including sales salaries, sales commissions, advertising, depreciation on items used in sales, and delivery expenses

Single-step income statement

income statement format that groups all revenues together and lists all expenses together, subtracting total expenses from total revenues and calculating net income or net loss without computer any subtotals

Subsidiary ledger

an accounting record that contains details, such as a list of customers and the accounts receivable due from each, or a lost of suppliers and the accounts payable due to each

Supply Chain

the chain of transactions between businesses that supply goods and the customers who ultimately use them

Title

ownership

Wholesalers

Businesses that buy goods from manufacturers and resell them to retailers.

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