cash discountA reduction in invoice price offered to customers to encourage prompt payment of invoices
cost of goods soldThe total cost attributed to units of inventory actually sold during a period
credit memorandumA seller-prepared document evidencing an approved return of merchandise for credit against an account
debit memorandumA purchaser-prepared document evidencing a return of merchandise to a seller
F.O.B. destinationFree 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
F.O.B. shipping pointFree 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
goods available for saleA 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
gross methodA method of recording purchases of inventory at invoice price
gross profitA calculated amount corresponding to net sales minus cost of goods sold
list priceAn established price determined by reference to a catalog or general price list; before any discounts
multiple-step income statementA complex income statement with sections that segregate cost of goods sold calculations and other components of income and expense; enables enhanced evaluations of data
net methodA method of recording purchases of inventory at invoice price less available cash discounts
operating expensesGeneral expense category for selling and administrative costs
periodic inventory systemAn 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
perpetual inventory systemA "real-time" inventory system that updates inventory records with each purchase and sale
purchase discountsA cashdiscount available on purchases of merchandise on account; encourages prompt payment
sales discountsA cash discount offered to customers to encourage prompt payment of invoices
single-step income statementA 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
trade discountA reduction from list price that is not entered in the accounting records; customarily offered in "setting" the invoice amount
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