Chapter 4- Cost of Merchandise Sold

Vendor

Individual or firm from whom retailers buy merchandise. Also called resource or supplier

Net Payment Date

Last day on which the buyer can pay for an invoice before it is considered overdue.

private-label goods

Merchandise that carry the retailer's label and are sold exclusively by the retailer

Promotional Allowances

Money given to compensate a retailer for the expense of promoting a product or brand.

Net Terms

Notation on invoice which indicates that a cash discount is not allowed.

Allowances

Reimbursement or compensation granted to the retailer by the seller in return for specific services, such as advertising or display. For example, the vendor may agree to an advertise allowance whereby the trailer and vendor solid the cost of the advertisement.

Wholesale price

The amount the vendor charges for goods

X-Dating (Extra Dating)

The cash discount period is extended for an additional number of days.

FOB Destination; Charges Reversed

The vendor owns the goods until they get to the buyer's designated point; however, the buyer pays the transportation charges.

FOB Destination (FOB Store of FOB Buyer's Warehouse)

The vendor pays all transportation costs and owns the merchandise until it arrives at the place designated by the buyer.

FOB Shipping (Consolidation) Point

The vendor pays any crating and other costs necessary for getting the goods to a point where they can be turned over to a transportation company. The retailer pays transportation costs from the shipping point to the store/distribution center.

Trade Allowance

Trade compensation given for stocking or displaying merchandise.

rebate

a refund of part of the cost of the merchandise

Cash Discounts

is deducted after all other types of discounts have been deducted

COD (Cash on Delivery)

payment is due when buyer receives goods

Dating

refers to the length of time the retailer has to pay the invoice and the time during which the cash discount van be taken.

FOB Factory (or FOB Origin)

the buyer takes title to the merchandise at the point of shipment (Factory). The buyer pays all transportation charges and assumes all risks for the goods while they are in transit.

Net cost

The resulting amount to be paid for merchandise after applying discounts and transportation charges to the billed price

Markdown guarantees

An allowance offered by vendors to cover retailers' lost gross margin dollars resulting from retail price reductions

Invoice

A bill that is enclosed with a shipment of merchandise or that is mailed by the seller to the buyer

Seasonal Discount

A discount given for purchasing goods out of season

Robinson-Patman Act

A federal ruling that regulates price on discrimination in interstate commerce.

Back Office

A firm that assists vendors with operations, logistics, warehousing, and customer service

Buying Allowances

A price reduction for buying merchandise during a specified period

Quantity/Patronage Discount

A reduction in cost that is based on the size of the order

Slotting/Stocking/Introductory Allowance, or Street Money

Allowance given for stocking a new product

Damage Allowances

An allowance given to a retailer to compensate fro the cost of merchandise that has been returned but cannot be resold.

Trade Discounts

Compensation given for stocking or displaying merchandise.

Direct Method

Each discount is taken individually and subtracted from the previous balance or preceding net amount.

Factor

Financial intermediary that collects vendors' receivables from retailers

Terms

The conditions of the discount including the cash discount and dating.

Invoice Date

The date on the invoice, which usually is the date the merchandise is shipped.

EOM (End-of-Month)

The discount day is calculated from he end of the month. Invoices dated on or after the 26th are considered to be dated the first of the following month.

Discount Date

The last day on which the discount is allowed in the discount period.

List Price

The manufacturer's suggested retail price. The price or dollar amount to which the trade discount is applied to obtain the billed cost.

As of (Advanced Dating)

The periods are calculated from some future stipulated time.

Regular (ordinary or normal) Dating

The periods are calculated from the date of the invoice.

ROG (Receipt of Goods)

The periods are calculated from the date the goods are received.

Billed Cost

The price shown on the vendor's invoice after deductions for trade and/or quantity discounts, bu before cash discounts are taken.