Coming to TERMS
Terms for payment of account by the buyer to the seller
Credit Terms
Inventory
A sales incentive or promotion that provides the customer a discount when purchasing a product.
Coupon
This costing method is based on the assumption that the first units purchased are the first units sold
FIFO
Merchandise that is shipped by manufacturers to retailers who act as the manufacturer’s selling agent.
Consigned Inventory
A form used by a seller to inform the buyer of the amount the seller proposes to credit to the A/R due from the buyer
Credit Memorandum
Records are updated only after a physical count has been taken at the end of the accounting period
Periodic inventory system
Rebates that may be redeemed at the time of purchase.
Instant rebate
The method of costing is based on the assumption that the last units purchased are assumed to be sold first
LIFO
The retailer in a consigned inventory arrangement.
Consignee
Freight terms in which the seller pays the transportation costs from the shipping point to the final destination
FOB Destination
Perpetual inventory system
Discounts taken by the buyer for early payment of an invoice.
Purchase discounts
A method of estimating inventory cost that is based on the relationship of cost to retail price
Retail inventory method
The manufacturer in a consigned inventory arrangement.
Consignor
A form used by a buyer to inform the seller of the amount the buyer proposes to reduce the A/P due to the seller
Debit Memorandum
A company that sells merchandise to retailers
Vendors/Suppliers
A reduction in a customer’s account receivable granted due to damaged or defective merchandise.
Sales allowance
This method of valuing inventory reports the inventory at the smaller of the initial cost or current market value
Lower of Cost or Market (LCM)
The measure of the length of time it takes to acquire, sell, and replace inventory, computed by dividing the average inventory by the average daily cost of goods sold.
Days sales in inventory
The transfer of ownership happens prior to the goods being placed on the truck for shipment
This is designed to be used for recording a single type of transaction that occurs frequently
Special Journals
Discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers.
Trade discounts
The method of inventory costing in which a unit sold is identified with a specific purchase.
Specific Identification Inventory CF Method
A measure of the number of times inventory is turned into goods sold during the year, computed by dividing the cost of goods sold by the average inventory.
Inventory turnover