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Description
Flashcards by CHRISTIAN TIDIANE, updated 10 months ago
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Created by CHRISTIAN TIDIANE
11 months ago
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| Question | Answer |
| Chapter 7 | Chapter 7 |
| Trade discount | Reduction off original selling price (list price) not related to early payment |
| Cash discount | Savings that result from early payment by taking advantage of discounts offered by the seller; discount is not taken on freight or taxes |
| List price | Suggested retail price paid by customers |
| Trade discount amount | List price less net price |
| Invoice | Document recording purchase and sales transactions |
| Trade discount rate | Trade discount amount given in percent |
| Net price | List price less amount of trade discount. The net price is before any cash discount |
| Freight terms | Determine how freight will be paid. Most common freight terms are FOB shipping point and FOB destination |
| FOB shipping point | Buyer pays cost of freight in getting goods to his location |
| FOB destination | Seller pays cost of freight in getting goods to buyer’s location |
| Single trade discount | Company gives only one trade discount |
| Complement | 100% less the stated percent |
| Chain discount | Two or more trade discounts are applied to the balance remaining after the previous discount is taken. Often called a series discount |
| Series discount | Two or more trade discounts are applied to the balance remaining after the previous discount is taken. Often called a series discount |
| Net price equivalent rate | When multiplied times the list price, this rate or factor produces the actual cost to the buyer. Rate is found by taking the complement of each term in the discount and multiplying them together |
| Single equivalent discount rate | Rate or factor as a single discount that calculates the amount of the trade discount by multiplying the rate times the list price. This single equivalent discount replaces a series of chain discounts. The single equivalent rate is (1 – Net price equivalent rate) |
| Terms of the sale | Criteria on invoice showing when cash discounts are available, such as rate and time period |
| Credit period | Credit days are counted from date of invoice. Has no relationship to the discount period |
| Discount period | Amount of time to take advantage of a cash discount |
| Due date | Maturity date, or when the note will be repaid |
| End of credit period | Last day from date of invoice when customer can take cash discount |
| Ordinary dating | Cash discount is available within the discount period. Full amount due by end of credit period if discount is missed |
| Receipt of goods (ROG) | Used in calculating the cash discount period; begins the day that the goods are received |
| End of month (EOM) | (also proximo) The cash discount period begins at the end of the month invoice is dated. After the 25th discount period, one additional month's results |
| Chapter 8 | Chapter 8 |
| Selling price | Cost plus markup equals selling price |
| Cost | Price retailers pay to manufacturer or supplier to bring merchandise into store |
| Markup | Amount retailers add to cost of goods to cover operating expenses and make a profit |
| Margin | Difference between cost of bringing goods into store and selling price of goods |
| Gross profit | Difference between cost of bringing goods into the store and selling price of the goods |
| Operating expenses (overhead) | Regular expenses of doing business. These are not costs |
| Overhead expenses | Operating expenses not directly associated with a specific department or product |
| Net profit (net income) | Gross profit – Operating expenses |
| Net income | Gross profit less operating expenses |
| Dollar markup | Selling price less cost. The difference is the amount of the markup. Markup is also expressed in percent |
| Percent markup on cost | Dollar markup divided by the cost; thus, markup is a percent of the cost |
| Dollar markdown | Original selling price less the reduction to price. Markdown may be stated as a percent of the original selling price |
| Perishable | Goods or services with a limited life |
| Fixed costs (FC) | Costs that do not change with increase or decrease in sales |
| Variable costs (VC) | Costs that do change in response to change in volume of sales |
| Selling price | Cost plus markup equals selling price |
| Contribution margin (CM) | Difference between selling price and variable cost |
| Breakeven point (BE) | Point at which seller has covered all expenses and costs and has made no profit or suffered a loss |
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