Key Terms 1
amount a business receives from the sale of an item of merchandise
Selling Price
(price)
sells to those who use or consume the goods
Retail
Cost of Merchandise is $17.00
Markup is $15.50
What is the Selling Price?
$32.50
goods a business has on hand for sale to customers
Merchandise Inventory
for all purchases of merchandise on account
Purchases Journal
amount a business adds to the cost of merchandise to establish the selling price
Markup
buys and sells merchandise primarily to other merchandising businesses
Wholesale
Purchase Invoice Amount x Discount Rate = Cash Discount
Purchase Invoice Amount is $640.00
Discount Rate is 2.0%
What is the Cash Discount?
$12.80
merchandise inventory evaluated at the end of a fiscal period
Periodic Inventory
Deduction that a vendor allows on an invoice amount to encourage prompt payment
Cash Discount
a list of assets, usually containing the value of individual items
Inventory
Goods that a business purchases to sell
Merchandise
Purchase Invoice Amount – Cash Discount = Invoice Amount
Purchase Invoice Amount is $950.00
Cash Discount is $19.00
What is the Invoice Amount?
$931.00
periodic inventory conducted by counting, weighing, or measuring items of merchandise on hand
Physical Inventory
Reduction in the list price granted to a merchandising business
Trade Discount
a form requesting that a vendor sell merchandise to a business
Purchase Order
Purchases and resells goods
Merchandising Business
What is 2/10, n/30?
2% discount if paid within 10 days.
Must pay full invoice amount in 30 days.
inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise
Perpetual Inventory
a journal used to record only one kind of transaction
Special Journal
source document for recording a purchase on account transaction
Purchase Invoice
A transaction in which the items purchased are to be paid for later
Purchase On Account
(on account)