A cash discount claimed by a buyer for prompt payment of a balance due Purchase discount

Sales less sales returns and allowances and sales discounts. net sales

Transactions in which the seller either accepts goods back from the purchaser (a return) or
grants a reduction in the purchase price (an allowance) so that the buyer will keep the goods.
Sales returns and allowances

An account that is offset against a revenue account on the income statement. Contra
revenue account

The excess of net sales over the cost of goods sold. Gross profit

A return of goods from the buyer to the seller for cash or credit. Purchase return

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. Perpetual inventory
system

A deduction made to the selling price of merchandise, granted by the seller, so that the buyer
will keep the merchandise. Purchase allowance

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. Periodic inventory system

Gross profit expressed as a percentage by dividing the amount of gross profit by net sales.
Gross profit rate

A measure used to indicate the extent to which a company's earnings provide a full and
transparent depiction of its performance; computed as net cash provided by operating activities
divided by net income. Quality of earnings ratio

A reduction given by a seller for prompt payment of a credit sale. Sales discount

A document that provides support for each purchase. Purchase invoice

Primary source of revenue for a merchandising company. Sales revenue

A document that provides support for each sale. Sales invoice

Measures the percentage of each dollar of sales that results in net income, computed by
dividing net income by net sales. Profit margin
The total cost of merchandise sold during the period. Cost of goods sold

Which of the following statements about a periodic inventory system is true? Companies
determine cost of goods sold only at the end of the accounting period.

Which of the following items does not result in an adjustment in the Inventory account under a
perpetual system? Payment of freight costs for goods shipped to a customer.

Which sales accounts normally have a debit balance? Sales discounts and
Sales returns and allowances

A company makes a credit sale of $750 on June 13, terms 2/10, n/30, on which it grants a
return of $50 on June 16. What amount is received as payment in full on June 23? $686.

To record the sale of goods for cash in a perpetual inventory system: two journal entries
are necessary: one to record the receipt of cash and sales revenue, and one to record the cost
of goods sold and reduction of inventory.

Gross profit will result if: sales revenues are greater than cost of goods sold.

If sales revenues are $400,000, cost of goods sold is $310,000, and operating expenses are
$60,000, what is the gross profit? $90,000.

The multiple-step income statement for a merchandising company shows each of these features
except:gross profit,cost of goods sold,a sales section.

If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is
$50,000, what is cost of goods sold under a periodic system? $390,000

Bufford Corporation had reported the following amounts at December 31, 2014: sales revenue
$184,000; ending inventory $11,600; beginning inventory $17,200; purchases $60,400;
purchase discounts $3,000; purchase returns and allowances $1,100; freight-in $600; freight-out
$900. Calculate the cost of goods available for sale.$74,100.(60400-3000-1100+600)

Which of the following would affect the gross profit rate? (Assume sales remains constant.)
An increase in cost of goods sold.

The gross profit rate is equal to: net sales minus cost of goods sold, divided by net sales.

During the year ended December 31, 2014, Bjornstad Corporation had the following results:
sales revenue $267,000; cost of good sold $107,000; net income $92,400; operating expenses
$55,400; net cash provided by operating activities $108,950. What was the company's profit
margin? 34.6%. 92,400/26,700
A quality of earnings ratio: that is less than 1 indicates that a company might be using
aggressive accounting tactics.

When goods are purchased for resale by a company using a periodic inventory system:
purchases on account are debited to Purchases.