Definition
| Term (memorize) | Definition (memorize) |
|---|---|
| Periodic Inventory System | Business does not keep an continuous record of inventory on hand. Physical count is don at the end of the period and is used for the financial statements. |
| Perpetual Inventory System | Business keeps a running record of inventory and cost of good sold. |
| Invoice | A seller's request for cash from the purchaser |
| Sales Revenue | The amount that a merchandiser earns from selling its inventory |
| Cost of Goods Sold | The cost of the inventory that the business has sold to customers |
| Sales Returns and Allowances | Decrease in the seller's recievable from a customer's return of merchandise or from granting the customer an allowance. |
| Sales Discount | An incentive for the customer to pay early |
| Net Sales Revenue | Sales revenue less sales discounts, sales returns, and allowances. |
| Gross Profit | Excess of net sales revenue over cost of goods sold. |
| Operating Expenses | Expenses other than the cost of goods sold. Rent, depreciation, salaries, wages, utilities, and supplies expense. |
| Operating Income | Gross profit minus operating expenses |
| Other Revenue | Revenue outside the main operations of business (ie a gain on the sale of plant assets) |
| Other Expense | Expense that is outside the main operations of business (ie a loss on the sale of a plant asset) |
| Multi-Step Income Statement | Contains subtotals to highlight certain relationships. Reports gross profit and operating income. |
| Single-Step Income Statement | Groups all revenues together and lists and deducts all expenses together without drawing any subtotals. |
| Inventory Turnover | Ratio of cost of goods sold to average inventory. Measures the number of times a company sells its average level of inventory a year. |
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