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chapter 5 vocab
chapter 5
| Term | Definition |
|---|---|
| accounts payable subsidiary ledger | subsidiary ledger containing individual accounts with suppliers |
| accounts receivable subsidiary ledger | subsidiary ledger containing individual accounts with customers |
| administrative expenses | expenses incurred in the general operations of the business |
| asset turnover ratio | profitability ratio that measures how affectively a business is using its assets to generate sales =DIVIDE(sales/average total assets) |
| B2B | transactions between suppliers and retailers |
| B2C | transactions between retailers and consumers |
| cash refund | amount paid by the seller to the buyer for merch that is defective, damaged, or does not meet buyer's expectations |
| controlling account | account in the general ledger that summarizes the balances of the accounts in a subsidiary ledger |
| cost of goods sold | cost of merch sold recognized as an expense |
| coupon | promotion that provides the customer a discount when purchasing a product |
| credit memorandum | a form used by a seller to |
| credit period | amount of time the buyer is allowed in which to pay the seller |
| credit terms | terms for payment on account by the buyer to the seller |
| customer refunds payable | a liability account for estimated refunds and allowances that will be paid or granted to customers in the future |
| debit cards | cards used for electronic payment where money is deducted instantly from the bank account |
| debit memorandum | notify the seller of reasons for the return |
| estimated coupons payable | a current liability account for the estimated amount of coupons printed out with sales receipts that will be redeemed by customers |
| estimated returns payable | a current asset account for the estimated amount of merch that will be returned by customers |
| free on board destination | seller pays freight |
| free on board shipping point | buyer pays freight |
| general ledger | contains all of the balance sheet and income statement accounts |
| gross method of recording sales discounts | a method of recording sales invoice at the gross amount rather than subtract any discounts for early payment |
| gross profit | sales minus the cost of goods sold |
| instant rebates | rebates that may be redeemed at the time of purchase |
| inventory shrinkage | merch for sale in the account is larger than the physical inventory |
| inventory subsidiary ledger | a supporting ledger to the inventory account containing an individual account for each inventory item |
| invoice | the bill that the seller sends to the buyer for sales made or services rendered on account |
| multiple step income statement | a form of income statement that contains several sections |
| net method of recording sales discounts | a method of recording a sales invoice at the amount net of any discounts for early payment |
| operating cycle | the process by which a company spends cash, generates revenue and receives cash from customers |
| operating income | difference between gross profit and operating expenses |
| other expense | expenses that cannot be traced directly to operations |
| other revenue | revenue from other sources other than the primary operating activity of a business |
| periodic inventory system | an inventory system in which the inventory records are updated only after a physical count has been taken at periodic intervals |
| perpetual inventory system | an inventory system in which purchase and sale of merchandise is recorded in the inventory account and related subsidiary ledger |
| physical inventory | a detailed listing of merch on hand |
| purchase discounts | discounts taken by the buyer for early payment of an invoice |
| purchase returns and allowances | adjustment for defective merch |
| rebate | sales incentive or promotion that provides the customer a refund after the product is purchased |
| retail business | business that purchases products from other business and sells them to customers |
| sales | revenue earned from merchandise sold |
| sales allowance | a reduction in a customer's account receivable due to damaged or defective merch |
| sales discount | a discount that a seller may offer the buyer for early payment |
| selling expenses | expenses that are incurred directly in the selling of merch |
| single-step income statement | a form of income statement in which all of the expenses is deducted from the total of all revenues |
| special journals | journals designed to be used for recording a single type of transaction that occurs frequently |
| subsidiary ledger | individual accounts with a common characteristic grouped together in a separate ledger, used to support a controlling account in the general ledger |
| suppliers | companies selling the merchandise |
| trade discounts | discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers |
| wholesale business | a company that sells merch to other business rather than to the public |
| inventory | merch on hand that was not sold at the end of an accounting period |
Created by:
hellocookies
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