the excess of net sales over the cost of goods sold gross profit on sales the revenue remaining after cost of merchandise sold has been deducted Gross Profit Percentage gross profit/net sales
the excess of net sales over the cost of goods sold
gross profit on sales
the revenue remaining after cost of merchandise sold has been deducted
Gross Profit Percentage
gross profit/net sales
Invoice price
amount the dealer paid to buy the car from the manufacturer
List price
established price normally quoted to potential buyers
Manufacturers
A type of producer that changes the shapes or forms of materials so that they will be useful to customers
Merchandise Inventory
The amount of goods on hand for sale to customers
Merchandising Firms
companies that purchase finished products from manufacturers for warehousing, display, and sale to consumers
Net sales
Total sales less sales discount and sales returns and allowances
Open account
is a charge account provided by a retailer for its customers. Many retailers such as Nordstrom have their own branded credit card to facilitate open account sales. If a customer pays cash, the retailer receives cash immediately
Operating cycle
The average time required to purchase inventory, sell it on account, and then collect cash from customers—that is, go from cash to cash.
periodic inventory system
An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period.
perpetual inventory system
A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.
Purchase allowance
a deduction made to the selling price of merchandise, granted by the seller, so that the buyer will keep the merchandise
purchase return
a return of goods from the buyer to the seller for cash or credit
retailers
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