Key Terms
The key terms used in the section are listed below:
Accounts payable subsidiary ledger: Businesses may purchase merchandise from different suppliers. Therefore, it is useful to set up an accounts payable subsidiary ledger with an account for each supplier and creditor.
Bankcard fee: A bankcard fee is usually a percentage of the total amount of the processed bankcard sales slips.
Cost of merchandise: Cost of merchandising accounts contain the actual cost of merchandise sold to customers.
Debit memorandum: A debit memorandum (memo) is used to notify suppliers (creditors) of a return, or to request an allowance.
Discount period: The duration or the period within which an invoice must be paid to take advantage of a discount on the purchase of goods.
Due date: The date on which an amount should be paid to a customer.
FOB destination: The supplier pays the shipping cost to the buyer’s destination or location.
FOB shipping point: The buyer pays the shipping charge from the supplier’s shipping point.
Premium: The cost of insurance protection.
Processing stamp: When a company receives an invoice, a clerk puts a processing stamp on the invoice indicating the due date, the amount of any discount, and the amount to be paid.
Purchase order: A written offer sent to a supplier to buy specified items or goods.
Purchase requisition: A written request to place an order for specified items or goods.
Purchase account: A temporary account under the cost of merchandising account.
Purchases allowances: A purchase allowance occurs when a business keeps less than satisfactory merchandise and pays the reduced price.
Purchases discount: A cash discount offered by the supplier to the customer for an early payment.
Purchases return: A purchase return occurs when a business returns merchandise to the supplier for full credit.
Tickler file: After receiving goods, the invoice verification details are filed by due date in a tickler file.