Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/46

Click to flip

46 Cards in this Set

  • Front
  • Back
goods that a business purchases to sell
merchandise
a business that purchases and sells goods
merchandising business
a merchandising business that sells to those who use or consume the goods
retail merchandising business
a business that buys and resells merchandise to retail merchandising businesses
wholesale merchandising business
any organization with the legal rights of a person and which many persons may own
corporation
each unit of ownerships in a corporation
share of stock
total shares of ownership in a corporation
capital stock
an owner of one or more shares of a corporation
stockholder
a journal used to record only one kind of transaction
special journal
price a business pays for goods it purchases to sell
cost of merchandise
amount added to the cost of merchandise to establish the selling price
markup
business from which merchandise is purchased or supplies or other assets are bought
vendor
transaction in which the merchandise purchased is to be paid for later
purchase on account
a special journal used to record only purchases of merchandise on account
purchases journal
a journal amount column headed with an account title
special amount column
an invoice used as a source document for recording a purchase on account transation
purchase invoice
what kinds of transactions are recorded in a purchases journal?
purchases of merchandise on account
for what are special amount columns in a journal used?
frequently occurring transations
why are there two account titles in the amount column of the purchases journal?
because the same two accounts are always affected by purchase on account transations
what is the advantage of having special amount columns in a journal?
time is saved because using special amount columns eliminates writing an account title in the account title column
a special journal used to record only cash payment transactions
cash payments journal
a deduction that a vendor allows on the invoice amount to encourage prompt payment
cash discount
a cash discount on purchases taken by a customer is
purchases discount
journal amount column not headed with an account title
general amount column
the retail price listed in a catlog or an internet site
list price
a reduction in the list price granted to customers
trade discount
an account that reduces a related account on a financial statement
contra account
why would a vendor offer a cash discount to a customre?
to encourage early payment
what is recorded in the general amount columns of the cash payments journal?
cash payment transactions that do not occur often
what is the difference between purchasing merchandise and buying supplies?
a business purchases merchandise to sell but buys supplies for use in the business. supplies are not intended for sales.
what is meant by terms of sale 2/10, n/30?
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.
a petty cash on hand amount that is less than a recorded amount
cash short
a petty cash on hand amount thats more than a recorded amount
cash over
when journalizing a cash payment to replenish petty cash, whats entered in the Account Title column of the cash payments journal?
the titles of the accounts for which the petty cash fund was used
what is the usual balance of the account cash short and over
the balance is usually a debit beacuse the petty cash fund is more likely to be short than over
list the five steps for ruling a cash payments journal at the end of the month.
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
credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable
purchases return
credit allowed for part of the purchase of merchandise thats not returned, resulting in a decrease in the customer's accounts payable
purchases allowance
a form prepared by the customer showing the price deduction taken by the customer for returns and allowances
debit memorandum
what journal is used to record transactions that cannot be recorded in special journals?
general journal
why is a memorandum used as the source doc when supplies are bought on account?
to note that the invoice is for store supplies and not for purchases, ensuring that no mistake is made
why are two account titles written for the credit amount when supplies are bought on account?
because the single credit amount is posted to two accounts
when is the equality of debits and credits proved for a general journal?
after each general journal entry is recorded
if purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account?
a business can track the amt of purchases returns and allowances in a fiscal period if a separate account is used
what is a primary difference between a purchases return and a purchases allowance?
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.
when is a debit memorandum a proper source document for a purchases return or allowance?
when the customer wants to record the transactio nimmediately, without waiting for written confirmation from the vendor.