Chapter 4: Cost of Merchandise Sold
FOB Factory (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.
Extra Dating (X-Dating)
The cash discount period is extended for an additional number of days
Dating
The time limits that apply to paying for merchandise. Dating involves two different periods: (1) the last day on which the cash discount is allowed and (2) the last day for payment before the bill is considered overdue.
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
The vendor pays all transportation costs and owns the merchandise until it arrives at the place designated by the buyer. These terms can also be written as "FOB Store" or "FOB Buyer's Warehouse"
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. These terms can also be written as "FOB Consolidation Point." The retailer pays transportation costs from the shipping point to the store/distribution center.
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 discrimination in interstate commerce
Back Office
a firm that assists vendors with operations, logistics, warehousing, and customer service
Trade/Functional Discount
a percent reduction from list price that may be one or a series of discounts
Buying Allowance
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
Discount
a reduction in price allowed by the seller
Rebate
a refund of part of the cost of the merchandise
Slotting/Stocking/Introductory Allowance, or Street Money
allowance given for stocking a new product
COD
cash on delivery means that payment is due when buyer receives goods
Trade Allowance
compensation given for stocking or displaying merchandise
Vendor
individual or firm from whom retailers buy merchandise. Also called a 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
Allowance
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 advertising allowance whereby the retailer and vendor split the cost of the advertisement
Wholesale Price
the amount the vendor charges for goods
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
Discount Date
the last day on which the discount is allowed in the discount period
Advanced Dating ("As of" Dating)
the periods are calculated from some future stipulated time
Regular/Ordinary/Normal Dating
the periods are calculated from the date of the invoice
ROG Dating
the periods are calculated from the date the goods are received
Billed Cost/Gross Cost
the price shown on the vendor's invoice after deductions for trade and/or quantity discounts, but before cash discounts are taken
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
Factor
Financial intermediary that collects vendors' receivables from retailers
Cash Discount
A percent reduction in price allowed if the retailer pays for merchandise before some specified date; a price reduction allowed for prompt payment.
Damage Allowance
A price reduction for buying merchandise during a specified period
FOB (Free on Board)
A shipping term placed before a specific location, such as factory, origin, or store. That location is the point at which title (ownership) to the merchandise changes.
EOM Dating
The discount day is calculated from the end of the month. Invoices dated on or after the 26th are considered to be dated the first of the following month.
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.
