Accounting ch 9
Controlling account
An account in a general ledger that summarizes all accounts in a subsidiary ledger
Contra account
An account that reduces a related account on a financial statement
Terms of sale
An agreement between a buyer and a seller about payment for merchandise
Perpetual inventory
An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise
Corporation
An organization with the legal rights of a person which many persons or other corporations may own
The purchases account is classified as
Cost of goods sold on account
To replenish a $300.00 petty cash fun, if the petty cash custodian had receipts totaling $224.00 and cash of $74.00 in the petty cash box, one part of the journal entry is
Debit to cash short and over for $2.00
A merchandising business places purchases in the operating expenses section of the income statement
False
A transaction to record merchandise purchases with a trade discount would include a debit to merchandise discount
False
The terms of sale of 1/10, n/30 means that 1/10, or 10%, of the invoice amount may be deducted if paid within 30 days
False
The total of a schedule of accounts payable less purchases discounts taken during the month will equal the total of accounts payable
False
A purchase of merchandise for cash would be posted
Individually to purchases
Since contra accounts are offsets to their related accounts, contra account normal balances are
Opposite the normal balances of their related accounts
An employee working with an account can trace a transaction back to the correct journal by using information in the
Post. Ref. Column
A corporation can own property, incur liabilities, and enter into contracts in its own name
True
A corporation exists independent of its owners
True
The contra account Purchases Discount has a normal debit balance
True
The periodic inventory method does not require records of the quantity and cost of individual goods
True
The petty cash account, cash short and over is a temporary account
True
The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, accounts payable
True
Merchandise with a list price of $1,500.00 is purchased on account for $900.00 on August 1. Terms of sale are 2/10, n/30. Payment is made on August 17. The amount paid should be
$900.00
Articles of incorporation
A legal document that identifies basic characteristics of a corporation, which is a part of the application submitted to a state to become a corporation
Schedule of accounts payable
A listing of vendor accounts, account balances, and the total amount due to all vendors. Some businesses call this listing an accounts payable trial balance
Periodic inventory
A merchandise inventory evaluated at the end of a fiscal period
Retail merchandising business
A merchandising business that sells to those who use or consume the goods
A periodic inventory conducted by counting, weighing, or measuring items of merchandise on hand is called
A physical inventory
Trade discount
A reduction in the list price granted to a merchandising business
Share of stock
A unit of ownership in a corporation
Wholesale merchandising business
A business that buys and resells merchandise primarily to other merchandising businesses
Cash discount
A deduction that a vendor allows on an invoice amount to encourage prompt payment
Purchase order
A form requesting that a vendor sell merchandise to a business
Requisition
A form requesting the purchase of merchandise
General amount column
A journal amount column that is not headed with an account title
Special journal
A journal used to record only one kind of transaction
Supplies bought for use in a business are recorded in the
Purchases account
Credit limit
The maximum outstanding balance allowed to a customer by a vendor
Stockholder
The owner of one or more shares of stock
List price
The retail price listed in a catalog or on an internet site