Accounting Ch 10 Test Review
Terms of sale
An agreement between a buyer and a seller about payment for merchandise.
Purchase invoice
An invoice used as a source document for recording a purchase on account transaction
are usually cash or merchandise
Assets taken out of a business for the personal use of an owner
Partner
Each member of a partnership
Merchandise
Goods that a merchandising business purchases to sell
Business Entity
Keeping the reports and financial records of a business separate from the personal recors of the partners is an application of the accounting concept
False
When a business keeps its accoutning records on the assumption that it will make money and continue in business indefinitely, it s applying the Consistent Reporting accounting concept.
False
When a business requires the skills of more than one person and needs more capital than one owner can provide, it should be organized as a proprietorship
Transaction will increase the balance of the drawing account and decrease the balance of the purchases account
When merchandise is withdrawn by a partner, the
Retail Merchandising Business
A merchandising business that sells to those who use or consume the goods.
Cash Payments Journal
A special journal used to record only cash payment transactions
Purchases Journal
A special journal used to record only purchases of merchandise on account.
False
Accounts related to the cost of merchandise are kept in the Revenue division in the general ledger chart of accounts.
purchase invoice
the source doument for recording a purchase on account transaction is a
Vendor
A business from which merchandise is purchased or supplies or other assets are bought
Partnership
A business in which two or more persons combine their assets and skills
Wholesale Merchandising business
A business that buys and resells merchandise to retail merchandiding businesses.
Merchandising Business
A business tht purchases and sells goods
False
A cash payments journal should include a secial amount column for every kind of cash payment the business might record.
special amount column
A journal amount column headed with an account title
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 account
Supplies bought for use in a business are recorded in the
Markup
The amount added to the cost of merchandise to establish the selling price.
debit Purchases; credit Accounts Payable
The entry to journalize a purchase of merchandise on account is
False
The main difference between a service business and a merchandiding business is the jouranl used to record transactions.
cost of merchandise
The price a buisness pays for goods it purchases to sell
A cost account
The purchases account is classified as
A check
The source document for a cash purchase is