contra revenue account
an account that is offset against a revenue account on the income statement
cost of goods sold
the total cost of merchandise sold during the period
gross profit
the excess of net sales over the cost of goods sold
gross profit rate
gross profit expressed as a percentage by dividing the amount of gross profit by net sales
net sales
sales less sales returns and allowances and sales discounts
periodic inventory system
an inventory system in which a company does not maintain detailed records of goods on hand and determine the cost of goods sold only at the end of an accounting period
profit margin ratio
measures the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales
purchase allowance
a deduction made to the selling price of merchandise granted by the seller so that the buyer will keep the merchandise
purchase discount
a cash discount claimed by a buyer for prompt payment of a balance due
purchase invoice
a document that supports each purchase
purchase return
a return of goods from the buyer to the seller for cash or credit
quality of earnings ratio
a measure used to indicate the extent to which a company's earnings provide a full transparent depiction of its performance computed as net cash provided by operating activities divded by net income
sales discount
a reduction given by a seller for prompt payment of a credit sale
sales return and allowances
transactions in which the seller either accepts goods back from the purchaser or grants a reduction in the purchase price so that the buyer will keep the goods
sales revenue
primary source of revenue in a merchandising company q