An income statement format that shows intermediate totals between sales and net income and detailed computations of net sales and costs of goods sold.
Classified multiple-step income state.
The cost of merchandise sold to customers during a period.
Cost of goods sold
The time period that can pass before a customer's payment is due.
Credit period
The description of the amounts and timing of payments that a buyer agrees to make in the future.
Credit terms
The time period in which a cash discount is available and a reduced payment can be made by the buyer.
Discount period
The abbreviation for end-of-month; used to describe credit terms for some transactions.
EOM
The abbreviation for free on board, the designated point at which ownership of goods passes to the buyer; FOB shipping point (or factory) means that the buyer pays the shipping costs and accepts ownership of the goods at the seller's place of business. FOB destination means that the seller pays the shipping costs and transfers ownership to the buyer at the buyer's place of business.
FOB
Expenses that support the overall obligations of a business and include the expenses of such activities as providing accounting services, human resource management, and financial management.
General and administration expenses.
The difference between net sales and the cost of goods sold; also called gross margin.
Gross profit
The catalogue price of an item before any trade discount is deducted.
List price
Products, also called goods, that a company acquires for the purpose of reselling them to customers.
Merchandise
Products that a company owns for the purpose of selling them to customer.
Merchandise inventory
Earns net income by buying and selling merchandise.
Merchandiser
The expenses of promoting sales by displaying and advertising the merchandise, making sales, and delivering goods to customers.
Selling expenses
Inventory losses that occur as a result of shoplifting or deterioration.
Shrinkage
Cash discount:
A reduction in the price of merchandise that is granted by a seller to a purchaser in exchange for the purchaser paying within a specified period of time called the discount period.
Classified, multiple-step income statement:
An income statement format that shows intermediate totals between sales and net income and detailed computations of net sales and costs of goods sold.
Cost of goods sold:
The cost of merchandise sold to customers during a period.
Credit memorandum:
A notification that the sender has entered a credit in the recipient's account maintained by the sender.
Credit period:
The time period that can pass before a customer's payment is due.
Credit terms:
The description of the amounts and timing of payments that a buyer agrees to make in the future.
Debit memorandum:
A notification that the sender has entered a debit in the recipient's account maintained by the sender.
Discount period:
The time period in which a cash discount is available and a reduced payment can be made by the buyer.
EOM:
The abbreviation for end of month, used to describe credit terms for some transactions.
FOB:
The abbreviation for free on board, the designated point at which ownership of goods passes to the buyer; FOB shipping point (or factory) means that the buyer pays the shipping costs and accepts ownership of the goods at the seller's place of business; FOB destination means that the seller pays the shipping costs and the ownership of the goods transfers to the buyer at the buyer's place of business.
General and administrative expenses:
Expenses that support the overall operations of a business and include the expenses of such activities as providing accounting services, human resource management, and financial management.
Gross margin:
The difference between net sales and the cost of goods sold; also called gross profit.
Gross margin ratio:
Gross margin (net sales minus cost of goods sold) divided by net sales; also called gross profit ratio.
Gross profit:
The difference between net sales and the cost of goods sold.; also called gross margin.
Gross profit ratio:
Measures how much of net sales is gross profit; calculated as gross profit divided by net sales; also known as the gross margin ratio.
Inventory:
See Merchandise inventory.
List price:
The catalogue price of an item before any trade discount is deducted.
Merchandise:
Products, also called goods, that a company acquires for the purpose of reselling them to customers.
Merchandise inventory:
Products that a company owns for the purpose of selling them to customers.
Merchandiser:
Earns net income by buying and selling merchandise.
Periodic inventory system:
A method of accounting that records the cost of inventory purchased but does not track the quantity on hand or sold to customers; the records are updated at the end of each period to reflect the results of physical counts of the items on hand.
Perpetual inventory system:
A method of accounting that maintains continuous records of the cost of inventory on hand and the cost of goods sold.
Purchase discount:
A term used by a purchaser to describe a cash discount granted to the purchaser for paying within the discount period.
Retailer:
A middleman that buys products from manufacturers or wholesalers and sells them to consumers.
Sales discount:
A term used by a seller to describe a cash discount granted to customers for paying within the discount period.
Selling expenses:
The expenses of promoting sales by displaying and advertising the merchandise, making sales, and delivering goods to customers.
Shrinkage:
Inventory losses that occur as a result of shoplifting or deterioration.
Single-step income statement:
An income statement format that includes cost of goods sold as an operating expense and shows only one subtotal for total expenses.
Supplementary records:
A register of information outside the usual accounting records and accounts; also called supplemental records.
Trade discount:
A reduction below a list or catalogue price that may vary in amount for wholesalers, retailers, and final consumers.
Wholesaler:
A "middleman" that buys products from manufacturers or other wholesalers and sells them to retailers or other wholesalers.
