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.