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Periodic Inventory - Purchase Discounts definitions Flashcards

Periodic Inventory - Purchase Discounts definitions
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  • Periodic Inventory System
    Inventory tracking method where purchases and discounts are recorded in separate accounts and inventory is updated at period end.
  • Purchase Discounts
    Reductions in purchase price offered by suppliers for early payment, recorded in a contra inventory account.
  • Contra Inventory Account
    Account that offsets inventory value, increasing with credits and reducing total inventory on the balance sheet.
  • Accounts Payable
    Liability account representing amounts owed to suppliers for goods or services purchased on credit.
  • Purchases Account
    Temporary account used in periodic systems to record the cost of inventory bought during the period.
  • Credit
    Accounting entry that increases liabilities, equity, or contra asset accounts, and decreases assets or expenses.
  • Debit
    Accounting entry that increases assets or expenses and decreases liabilities, equity, or contra asset accounts.
  • Net Terms
    Payment conditions specifying the discount period and the maximum time allowed to pay the invoice in full.
  • Inventory Value
    Monetary worth of goods held for sale, adjusted for purchase discounts and other inventory-related accounts.
  • Cash
    Asset account representing currency or funds available for immediate use in transactions.
  • Discount Period
    Time frame within which payment must be made to qualify for a purchase discount.
  • Contra Asset
    Account that reduces the balance of a related asset account, such as purchase discounts reducing inventory.
  • Payment Period
    Maximum number of days allowed to settle an invoice without incurring penalties or losing discounts.
  • Inventory Reduction
    Decrease in the recorded value of inventory due to factors like purchase discounts or returns.
  • Accounting Entry
    Record in the accounting system reflecting a business transaction, involving debits and credits to relevant accounts.