CHAPTER 7 & 8

Question	Answer
cash discount.	savings that results from early payment by taking advantage of discounts offered by the seller.
chain discounts	two or more trade discounts that are applied to the balance remaining after the previous discount is taken
complement	100% less than the stated percent
credit period	credit days are counted from date of invoice
discount period	amount of time to take advantage of a cash discount
due dates	maturity date or when the note will be repaid
end of credit period	last day from date on invoice when customer can take cash discount
end of month EOM	cash discount. period. begins at the end of the. month invoice is dated after the 25th. discount. period one additional month. results
FOB Destination	seller pays cost of freight in getting goods to buyer's location
FOB shipping point	buyer pays cost of freight in getting goods to his location
freight terms	determine how freight will be paid. most common freight terms. are FOOB shipping point and FOB destination.
invoice	document recording purchase and sales transaction
list price	suggested retail price paid by customers
net price	list price less amount of trade discount. the net price is before any cash discount
Net Price Equivalent rate	when multiplied times the list price, this rate or factor produces the. actual cost to the buyer rate is found by taking the complements of. each term in the. discount and multiplying them together
ordinary dating	cash discount is available within the discount period. full amount due by end of credit period if discount is missed
receipt of goods ROG	used in. calculating the cash discount period, begins the day that the goods are received
series discount	two or more trade discounts that are applied to the balance remaining after previous discount is taken
single equivalent discount rate	rate or factor as a single discount that calculated the amount of the trade discount by multiplying the rate times the list price. This single equivalent discount replaces a series of chain discounts
single trade discount	company gives only one trade discount
terms of sale	criteria on invoice showing when cash discounts are available such as rate and time period
trade discount	reduction off original selling price not related to early payment.
trade discount amount	list price is less than net price
trade discount rate	trade discount amount given in percent
breakeven point	point at which seller has covered all. expenses and costs and has made no profit or suffered a loss
contribution margin	difference between selling price and variable cost
cost	price retailers pay to manufacturer or supplier to bring merchandise into store
dollar markdown	Original selling price less than the reduction price. Markdown may be stated. as a percent of the original selling price
dollar markup	selling price is less cost difference is the amount of the markup. Markup is also expressed in percent
fixed costs	costs that do not change with increase or decrease in sales
gross profit	difference between cost of bringing goods. into the store and selling price of the goods.
margin	difference between cost of bringing goods into store and selling price of goods
markdowns	reductions from original selling price caused by seasonal changes, special promotions
markup	amount retailers add to cost of goods to cover operating expenses and to make a profit
Net profit	gross profit - operating expenses
operating expenses	regular expenses of doing business
percent markup on cost	dollar markup divided by the cost
percent markup on selling price	dollar markup divided by the selling price
perishables	goods or services with a limited life
selling price	cost + markup = selling price
variable costs	costs that do change in response to change in volume of sales

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	Created by Madison Harston about 1 year ago