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.
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