CHAPTER 5 VOCABULARY – COLLEGE ACCOUNTING
The cost of the inventory that the business has sold to
customers. (Also called cost of sales).
Gross profit divided by net sales revenue. A measure of
profitability.
Excess of net sales revenue over cost of goods sold. Also
called gross margin.
Gross profit minus operating expenses plus any other
operating revenues. Also called operating income.
Ratio of cost of goods sold to average inventory.
Measures the number of times a company sells its
average level of inventory during a year.
Format of income statement that contains subtotals to
highlight significant relationships. In addition to net
income, it reports gross profit and operating income.
Format of income statement that groups all revenues
together and then lists and deducts all expenses
together without drawing any subtotals
Sales revenue less sales discounts and sales returns and
allowances.
Expenses, other than cost of goods sold, that are
incurred in the entitity’s major line of business.
Examples include rent, depreciation, salaries, wages,
utilities, and supplies expense.
Expenses that are outside the main operations of a
business, such as a loss on the sale of plant assets.
A system in which the business does not keep a
continuous record of inventory on hand. At the end of
the period, it makes a physical count of on-hand
inventory and uses this information to prepare the
financial statements.
The accounting inventory system in which the business
keeps a running record of inventory and cost of goods
sold.
All the goods that the company owns and expects to sell
in the normal course of operations.
The amount that a merchandiser earns from selling its
inventory. Also called sales.
Decreases in the seller’s receivable from a customer’s
return of merchandise or from granting the customer
an allowance from the amount owed to the seller. A
contra account to Sales Revenue.
A seller’s request for cash from the purchaser.
Purchases less purchase discounts and purchase returns
and allowances.
Revenue that is outside the main operations of a
business, such as gain on the sale of plant assets.
Reduction in the amount receivable from a customer,
offered by the seller as an incentive for the customer to
pay promptly. A contra account to sales revenue.
Cost of Goods Sold
Gross Profit Percentage
Gross Profit
Income from Operations
Inventory Turnover
Multi-step Income Statement
Single-Step Income Statement
Net Sales Revenue
Operating Expenses
Other Expenses
Periodic Inventory System
Perpetual Inventory System
Inventory
Sales Revenue
Sales Returns and Allowances
Invoice
Net Purchases
Other Revenue
Sales Discount.
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