Acct 201 Chpt 5

Front 1

Merchandiser

Back 1

A business that sells merchandise, or Goods, to customers.

Front 2

Merchandise inventory

Back 2

The merchandise that the business sales to customers.

Front 3

Wholesaler

Back 3

A type of merchandiser that buys goods from the manufacturers and then sells them to retailers.

Front 4

Retailer

Back 4

A type of merchandiser that buys merchandise either from a manufacturer or wholesaler and then sells those goods to Consumers.

Front 5

Vendor

Back 5

The individual or business from whom a company purchases goods.

Front 6

Cost of goods sold

Back 6

The cost of the merchandise inventory that the business has sold to customers.

Front 7

Operating Expenses

Back 7

Expenses, other than cost of goods sold, that are incurred in the entities major ongoing operations.

Front 8

Periodic inventory system

Back 8

An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand.

Front 9

Perpetual inventory system

Back 9

An inventory system that keeps a running computerized record of merchandise inventory.

Front 10

Invoice

Back 10

A seller's request for payment from the purchaser.

Front 11

Purchase discount

Back 11

A discount that businesses offer to purchasers as an incentive for early payment.

Front 12

Credit terms

Back 12

The payment terms of purchase or sale as stated on the invoice.

Front 13

Purchase return

Back 13

A situation in which sellers allow purchasers to return merchandise that is defective, damage, or otherwise unsuitable.

Front 14

Purchase allowance

Back 14

An amount granted to the purchaser as an incentive to keep Goods that are not "as ordered"

Front 15

Free on board shipping point

Back 15

Situation in which the buyer takes ownership to the goods after the goods leave the sellers place of business and the buyer typically pays the freight. The title passes to the buyer at the shipping point. The buyer pays the freight.

Front 16

Free on board destination

Back 16

Situation in which the buyer takes ownership to the goods at the delivery destination point and the seller typically pays the freight.

Front 17

Freight in

Back 17

The transportation cost to ship goods into the purchaser's warehouse; therefore, it is Freight on purchased goods.

Front 18

Freight out

Back 18

The transportation cost to ship goods out of the sellers Warehouse, therefore, it is Freight on good sold to a customer.

Front 19

Sales discount

Back 19

Reduction in the amount of cash received from a customer for early payment.

Front 20

Sales returns and allowances

Back 20

Decreases in a seller's receivable from a customer's return of merchandise or from granting the customer an allowance from the amount owed to the seller.

Front 21

Net sales revenue

Back 21

The amount a company has earned on sales of merchandise inventory after returns, allowances, and discounts have been taken out. Sales revenue Less sales returns and allowances and sales discounts.

Front 22

Inventory shrinkage

Back 22

The loss of inventory that occurs because of theft, damage, and errors.

Front 23

Single-step income statement

Back 23

Income statement format that groups all revenues together and then lists and deduct all expenses together without calculating any subtotals

Front 24

Multi-step income statement

Back 24

Income statement format that contain subtotals to highlight significant relationships. In addition to net income, it reports gross profit and operating income. Some of the subtotals include selling expenses, administrative expenses, other revenues and expenses comma and income tax expense.

Front 25

Selling expenses

Back 25

Expenses related to marketing and selling the company's goods and services.

Front 26

Administrative expenses

Back 26

Expenses incurred that are not related to marketing the company's goods and services.

Front 27

Operating income

Back 27

Measures the results of the entities major ongoing activities. Gross profit - operating expenses.

Front 28

Other revenues and expenses

Back 28

Revenues or expenses that are outside the normal, day-to-day operations of a business, such as a gain or loss on the sale of plant assets or interest expense.

Front 29

Income tax expense

Back 29

Expense incurred by a corporation related to federal and state income taxes.

Front 30

Gross profit percentage

Back 30

Measures the profitability of each sales dollar above the cost of goods sold. Gross profit / net sales revenue.

Front 31

Net purchases

Back 31

Purchases less purchase returns and allowances less purchase discounts.

Front 32

Gross profit

Back 32

Excess of net sales revenue over cost of goods sold.