Glossary of Terms
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- Net assets:
- Owner's equity, or assets minus liabilities.
- Net income:
- The net increase in owner's equity that results from business operations; revenues less expenses when revenues exceed expenses. For merchandising companies, what is left after deducting operating expenses from the gross margin from sales.
- Net method:
- A method of recording purchases that identifies discounts that are lost by requiring that purchases be recorded initially at their net price.
- Net loss:
- The net decrease in owner's equity that results when expenses exceed revenues.
- Net purchases:
- Gross purchases less purchases returns and allowances and purchases discounts plus any freight charges on the purchases.
- Net sales:
- The gross proceeds from sales of merchandise less sales returns and allowances and sales discounts.
- Normal balance:
- The usual balance of an account, also the side (debit or credit) that increases the account.
- Normal capacity:
- The average annual level of operating capacity needed to meet expected sales demand.
- Notes payable:
- Collective term for promissory notes owed by the person who promises to pay (maker) to other entities.
- Notes receivable:
- Collective term for promissory note held by the entity to whom payment is promised (payee).
- Notice of protest:
- A sworn statement that a promissory note was presented to the maker
for payment and the maker refused to pay.