Chapter 7 and 8 key terms

Question	Answer
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.
Chain Discounts	Two or more trade discounts that are applied to the balance remaining after the previous discount is taken.
Complement	100% less 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 of invoice when customer can take cash discount
End of Month	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 FOB shipping point and FOB destination.
invoice	Document recording purchase and sales transactions.
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 complement of each term in the discount and multiplying 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	Used in calculating the cash discount period; begins the day that the goods are received
Series Discounts	Two or more trade discounts that are applied to the balance remaining after the previous discount is taken.
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.
Single Trade discount	Company gives only one trade discount
Terms of the Salw	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 less 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 the reduction to price. Markdown may be stated as a percent of the original selling price. Ex. Dollar Markdown/ Original selling price.
Dollar Markup	Selling price less cost. Difference is the amount of the markup. Markup is also expressed in percent
Fixed Costr	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, and so on.
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. These are not costs.
Percent Markup on COst	Dollar markup divided by the cost; thus, markup is a percent of the cost
Percent markup on selling price	Dollar markup divided by the selling price; thus, markup is a percent of the selling price.
Perishables	Goods or services with a limited life.
Selling Price	Cost plus markup equals selling price
Variable Cost	Costs that do change in response to change in volume of sales

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	Created by Jared Beaver about 1 year ago