Assignment #2:

definition of following terms:

SALES RETURNS - A sales return is an adjustment to sales that arises from an actual return
by a customer of merchandise he/she previously bought from the business. It is commonly
recorded under the account "Sales Returns and Allowances".
SALES DISCOUNTS - Sales Discount refers to the reduction in the amount due from a
customer as a result of early payment. It is treated as a deduction from Sales.
PURCHASE - A purchase means taking possession of a given asset, property, item, or right
by paying a predetermined amount of money for the transaction to be completed
successfully. In other words, it’s an exchange of money for a particular good or service.
CONTRA PURCHASES - A contra account is used in order to better portray the relationship
between certain debits and credits within the overall financial structure of an entity. A
contra account can be used to remedy an error, track the depreciation of an asset, or
register payments that are not collectible.
PURCHASE DISCOUNTS - A purchase discount, also called a cash discount, is a reduction in
the price of a good if the buyer pays for it within the allowable period. In other words, this is
an incentive that the seller gives to the buyer in hopes that the buyer will pay for the
purchase in full before the actual due date.
FREIGHT IN - Freight In is the transportation cost associated with the delivery of goods from
a supplier to the receiving entity. For accounting purposes, the recipient adds this cost to
the cost of the received goods.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative expense is those
expenditures required to administer a business. These expenses are not related to the
construction or sale of goods or services. Another way of describing general and
administrative expenses is any expense that will still be incurred, even in the absence of any
sales or selling activity.
SELLING EXPENSES - Selling expenses are part of the operating expenses (along with
administrative expenses). Selling expenses include sales commissions, advertising,
promotional materials distributed, rent of the sales showroom, rent of the sales offices,
salaries and fringe benefits of sales personnel, utilities and telephone usage in the sales
department, etc.

, Leirylle H.
Tubice
ABM10A