Key Terms: Chapter Five
A reduction in invoice price offered to customers to encourage prompt payment of invoices
The total cost attributed to units of inventory actually sold during a period
A seller-prepared document evidencing an approved return of merchandise for credit against an account
A purchaser-prepared document evidencing a return of merchandise to a seller
Free on Board destination; meaning the transfer of ownership of inventory will occur when the goods reach their destination and the seller will incur the freight charges
Free on Board shipping point; meaning the transfer of ownership of inventory will occur when the goods are shipped and the purchaser will incur the freight charges
A calculated amount corresponding to the beginning inventory plus net purchases; represents the total pool of inventory available during a period from which sales can occur
A method of recording purchases of inventory at invoice price
A calculated amount corresponding to net sales minus cost of goods sold
Goods held for resale to others
List price less any trade discounts
An establish price determined by reference to a catalog or general price list; before any discounts
multiple-step income statement
A complex income statement with sections that segregate cost of goods sold calculations and other components of income and expense; enables enhanced evaluations of data
A method of recording purchases of inventory at invoice price less available cash discounts
General expense category for selling and administrative costs
An inventory system that utilizes a Purchases account and does not update inventory with each sale; inventory is updated by physical count at the end of accounting periods
A "real-time" inventory system that updates inventory records with each purchase and sale
A cash discount available on purchases of merchandise on account; encourages prompt payment
A cash discount offered to customers to encourage prompt payment of invoices
A simple income statement with a section for all revenues and another for all expenses; there is no direct association between specific revenue and expense components
A reduction from list price that is not entered in the accounting records; customarily offered in "setting" the invoice amount