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| Trading business | a business which aims to generate profit by purchasing goods and then selling then selling them at a higher price |
| Stock | goods purchased by a trading firm for the purposes of resale at a profit |
| Perpetual inventory system | system of accounting for stock that involves the conitnuous recording of stock movements in stock cards |
| Stock Card | a subsidiary accounting record that records each individual transactions involving the movement in and out of the business of a particular line of stock |
| Sales | the revenue earned by a trading firm from the sale of stock |
| Purchases | the stock bought by a trading firm for the purposes of resale |
| Cost of sales | the expense incurred when a stock flows out of the business due to a sale |
| Gross profit | the profit earned purely from the purchase and sale of stock, calculated by Sales minus Cost of sales |
| Cost price | the original purchase price of stock |
| First-in, First out | the assumption that the stock that is purchased first will be sold first |
| Stocktake | the process of counting every item of stock on hand to verify the accuracy of the stock cards and detect any stock loss or gain |
| Stock loss | an expense that occurs when the stocktake shows less stock than is shown on the stock cards |
| Stock gain | a revenue that occurs when the stocktake shows more stock on hand than is shown in the stocktake |
| Cost of Goods Sold | a heading used in the Profit and Loss Statement for all cost incurred to bring stock into a location and condition ready for sale |
| Adjusted Gross Profit | Gross profit less stock loss / plus stock gain |
| Stock Sheet | a listing of the quantity and value of each line of stock on hand |
| Stock turnover | an efficiency indicator which measures the average number of days it takes for a business to convert its stock into sales |
