Accounting Chapter 9

Front 1

goods that a business purchases to sell

Back 1

merchandise

Front 2

a business that purchases and sells goods

Back 2

merchandising business

Front 3

a merchandising business that sells to those who use or consume the goods

Back 3

retail merchandising business

Front 4

a business that buys and resells merchandise to retail merchandising businesses

Back 4

wholesale merchandising business

Front 5

any organization with the legal rights of a person and which many persons may own

Back 5

corporation

Front 6

each unit of ownerships in a corporation

Back 6

share of stock

Front 7

total shares of ownership in a corporation

Back 7

capital stock

Front 8

an owner of one or more shares of a corporation

Back 8

stockholder

Front 9

a journal used to record only one kind of transaction

Back 9

special journal

Front 10

price a business pays for goods it purchases to sell

Back 10

cost of merchandise

Front 11

amount added to the cost of merchandise to establish the selling price

Back 11

markup

Front 12

business from which merchandise is purchased or supplies or other assets are bought

Back 12

vendor

Front 13

transaction in which the merchandise purchased is to be paid for later

Back 13

purchase on account

Front 14

a special journal used to record only purchases of merchandise on account

Back 14

purchases journal

Front 15

a journal amount column headed with an account title

Back 15

special amount column

Front 16

an invoice used as a source document for recording a purchase on account transation

Back 16

purchase invoice

Front 17

what kinds of transactions are recorded in a purchases journal?

Back 17

purchases of merchandise on account

Front 18

for what are special amount columns in a journal used?

Back 18

frequently occurring transations

Front 19

why are there two account titles in the amount column of the purchases journal?

Back 19

because the same two accounts are always affected by purchase on account transations

Front 20

what is the advantage of having special amount columns in a journal?

Back 20

time is saved because using special amount columns eliminates writing an account title in the account title column

Front 21

a special journal used to record only cash payment transactions

Back 21

cash payments journal

Front 22

a deduction that a vendor allows on the invoice amount to encourage prompt payment

Back 22

cash discount

Front 23

a cash discount on purchases taken by a customer is

Back 23

purchases discount

Front 24

journal amount column not headed with an account title

Back 24

general amount column

Front 25

the retail price listed in a catlog or an internet site

Back 25

list price

Front 26

a reduction in the list price granted to customers

Back 26

trade discount

Front 27

an account that reduces a related account on a financial statement

Back 27

contra account

Front 28

why would a vendor offer a cash discount to a customre?

Back 28

to encourage early payment

Front 29

what is recorded in the general amount columns of the cash payments journal?

Back 29

cash payment transactions that do not occur often

Front 30

what is the difference between purchasing merchandise and buying supplies?

Back 30

a business purchases merchandise to sell but buys supplies for use in the business. supplies are not intended for sales.

Front 31

what is meant by terms of sale 2/10, n/30?

Back 31

two ten means 2% of the invoice amount may be deducted if the invoice is paid within 10 days of the invoice date. net thirty means that the total invoice amount bust me paid within 30 days.

Front 32

a petty cash on hand amount that is less than a recorded amount

Back 32

cash short

Front 33

a petty cash on hand amount thats more than a recorded amount

Back 33

cash over

Front 34

when journalizing a cash payment to replenish petty cash, whats entered in the Account Title column of the cash payments journal?

Back 34

the titles of the accounts for which the petty cash fund was used

Front 35

what is the usual balance of the account cash short and over

Back 35

the balance is usually a debit beacuse the petty cash fund is more likely to be short than over

Front 36

list the five steps for ruling a cash payments journal at the end of the month.

Back 36

1. rule a single line across all amount columns
2. write the date in the date column
3. write totals in the account title column
4. write each column total below the single line
5. rule a double line across all amount columns

Front 37

credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable

Back 37

purchases return

Front 38

credit allowed for part of the purchase of merchandise thats not returned, resulting in a decrease in the customer's accounts payable

Back 38

purchases allowance

Front 39

a form prepared by the customer showing the price deduction taken by the customer for returns and allowances

Back 39

debit memorandum

Front 40

what journal is used to record transactions that cannot be recorded in special journals?

Back 40

general journal

Front 41

why is a memorandum used as the source doc when supplies are bought on account?

Back 41

to note that the invoice is for store supplies and not for purchases, ensuring that no mistake is made

Front 42

why are two account titles written for the credit amount when supplies are bought on account?

Back 42

because the single credit amount is posted to two accounts

Front 43

when is the equality of debits and credits proved for a general journal?

Back 43

after each general journal entry is recorded

Front 44

if purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account?

Back 44

a business can track the amt of purchases returns and allowances in a fiscal period if a separate account is used

Front 45

what is a primary difference between a purchases return and a purchases allowance?

Back 45

a purchases return is credit allowed for the purchase price of returned merchandise. a purchases allowance is credit allowed for part of the purchase price of merchandise thats not returned.

Front 46

when is a debit memorandum a proper source document for a purchases return or allowance?

Back 46

when the customer wants to record the transactio nimmediately, without waiting for written confirmation from the vendor.