How can we help?

You can also find more resources in our Help Center.

40 terms

Accounting Test 3 Chapter 5

STUDY
PLAY
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.