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17 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 sheet.
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Cost of goods sold
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The total cost of merchandise sold during the period.
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Gross profit
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The excess of net sales over the cost of goods sold.
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Gross profit rate
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Gross profit expressed as a percentage by dividing the amount of gross profit by net sales.
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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 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.
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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 purchase.
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Purchase return
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A return of goods from the buyer to the seller for cash or credit.
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Quality of earning ratio
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A measure used to indicate the extent to which a company's earnings provide a full and transparent depiction of its performance; computed as net cash provided by operating activities divided by net income.
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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 provides support for each sale.
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Sales returns and allowances
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Transactions in which the seller either accepts goods back from the purchaser (a return) or grants a reduction in the purchase prince (an allowance) so that the buyer will keep the goods.
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Sales revenue
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Primary source of revenue in a merchandising company.
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