Chapter 7 and 8 Key Terms

Pregunta	Respuesta
Chapter 7	Chapter 7
Trade discount	Reduction off original selling price (list price) not related to early payment
Cash discount	Savings that result from early payment by taking advantage of discounts offered by the seller; discount is not taken on freight or taxes
List price	Suggested retail price paid by customers
Trade discount amount	List price less net price
Invoice	Document recording purchase and sales transactions
Trade discount rate	Trade discount amount given in percent
Net price	List price less amount of trade discount. The net price is before any cash discount
Freight terms	Determine how freight will be paid. Most common freight terms are FOB shipping point and FOB destination
FOB shipping point	Buyer pays cost of freight in getting goods to his location
FOB destination	Seller pays cost of freight in getting goods to buyer’s location
Single trade discount	Company gives only one trade discount
Complement	100% less the stated percent
Chain discount	Two or more trade discounts are applied to the balance remaining after the previous discount is taken. Often called a series discount
Series discount	Two or more trade discounts are applied to the balance remaining after the previous discount is taken. Often called a series 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 complement of each term in the discount and multiplying them together
Single equivalent discount rate	Rate or factor as a single discount that calculates the amount of the trade discount by multiplying the rate times the list price. This single equivalent discount replaces a series of chain discounts. The single equivalent rate is (1 – Net price equivalent rate)
Terms of the sale	Criteria on invoice showing when cash discounts are available, such as rate and time period
Credit period	Credit days are counted from date of invoice. Has no relationship to the discount period
Discount period	Amount of time to take advantage of a cash discount
Due date	Maturity date, or when the note will be repaid
End of credit period	Last day from date of invoice when customer can take cash discount
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
End of month (EOM)	(also proximo) The cash discount period begins at the end of the month invoice is dated. After the 25th discount period, one additional month's results
Chapter 8	Chapter 8
Selling price	Cost plus markup equals selling price
Cost	Price retailers pay to manufacturer or supplier to bring merchandise into store
Markup	Amount retailers add to cost of goods to cover operating expenses and make a profit
Margin	Difference between cost of bringing goods into store and selling price of goods
Gross profit	Difference between cost of bringing goods into the store and selling price of the goods
Operating expenses (overhead)	Regular expenses of doing business. These are not costs
Overhead expenses	Operating expenses not directly associated with a specific department or product
Net profit (net income)	Gross profit – Operating expenses
Net income	Gross profit less operating expenses
Dollar markup	Selling price less cost. The difference is the amount of the markup. Markup is also expressed in percent
Percent markup on cost	Dollar markup divided by the cost; thus, markup is a percent of the cost
Dollar markdown	Original selling price less the reduction to price. Markdown may be stated as a percent of the original selling price
Perishable	Goods or services with a limited life
Fixed costs (FC)	Costs that do not change with increase or decrease in sales
Variable costs (VC)	Costs that do change in response to change in volume of sales
Selling price	Cost plus markup equals selling price
Contribution margin (CM)	Difference between selling price and variable cost
Breakeven point (BE)	Point at which seller has covered all expenses and costs and has made no profit or suffered a loss

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	Creado por CHRISTIAN TIDIANE hace más de 1 año