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14 Cards in this Set
- Front
- Back
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Contra revenue account
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An account that is offset against a revenue account on the income statement
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Cost of goods sold
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The total cost of merchandise sold during a period
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Gross profit
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The excess of net sales over the cost of gods sold
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Net sales
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Sales less sales returns and allowances and sales discounts
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Periodic inventory system
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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
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Perpetual inventory system
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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
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Profit margin ratio
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Measures the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales
Profit margin ratio = net income/net sales |
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Purchase allowance
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A deduction made to the selling price of merchandise, granted by the seller so that the buyer will keep the merchandise
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Purchase discount
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A cash discount claimed by a buyer for prompt payment of a balance due
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Purchase invoice
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A document that supports each credit purchase
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Purchase return
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A return of goods from a buyer to a seller for cash or credit
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Sales discount
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A reduction given by a seller for prompt payment of a credit sale
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Sales invoice
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A document that provieds support for credit sales
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Sales revenue
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Primary source of revenue in a merchandising company
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