Acct:14:Vocab and Content

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In a merchandising business, the most frequent type of transaction is the sale of merchandise

True

Prenumbered sale slips help businesses keep track of all sales made on account

True

Retailers include clothing stores, CD's, and tape shops and automobile dealerships.

True

Sales discounts is classified as a contra revenue account.

True

Sales taxes are not usually charged to governmental agencies

True

Sales Returns and Allowances is classified as a

Contra Revenue Account

An account whose balance decreases another account's balance

Contra account

Credit card issued by a bank and honored by many businesses

Bankcard

The amount a customer may deduct if the payment for merchandise is made within a certain time

Cash discount

Accounts Receivable is a________ because its balance must equal the total of the accounts receivable subsidiary ledger.

Controlling account

Decrease Side of Merchandise Inventory

Credit

Decrease Side of Sales Discounts

Credit

Increase Side of Sales Tax Payable

Credit

Increase side of Sales

Credit

Normal Balance Side of Sales

Credit

Normal Balance Side of Sales Tax Payable

Credit

A charge customer is entitled to charge merchandise with

Credit card

Document prepared by the seller granting credit for damaged or returned merchandise

Credit memorandum

Sale set out the time allowed for payment

Credit terms

Decrease Side of Sales

Debit

Decrease Side of Sales Tax Payable

Debit

Increase Side of Merchandising Inventory

Debit

Increase side of Sales Discount

Debit

Normal Balance Side of Merchandise Inventory

Debit

Normal Balance Side of Sale Discounts

Debit

Maintains a list in alphabetical order of the charge customers of a business

Accounts receivable subsidiary ledger

Cash received by a business is referred to as a

Cash receipt

Transaction that occurs when a business receives full payment for the merchandise sold at the time of sale

Cash sale

Customer to whom a sale on account is made

Charge customer

A bankcard holder is a charge customer of the business from whom the purchase is being made

False

A cash discount is an advantage only to the buyer because he or she is able to purchase the merchandise at a reduced cost

False

A cash discount is calculated on the total of a sales slip, including the sales tax

False

A cash discount is recorded at the time the sale is made

False

A sale on account is paid for in cash when the merchandise is sold

False

A sales discount increases the revenue account sales

False

Bank card sales are processed the same way as a store's regular charge card sales

False

Cash discounts increase the amount to be received from charge customers

False

In most states, sales made to school districts and other gov agencies are taxable

False

Merchandising Businesses sell only on a cash and carry bases

False

Sales discounts increases the sales account

False

The most widely used bankcard in North America is American Express

False

Two of the accounts used by merchandising businesses are merchandise inventory and professional fees

False

The items of merchandise a business has in stock

Inventory

Sales Tax Payable is classifies as a?

Liability Account

If the date of an invoice is May 14, the credit terms are 2/10. n30, and the invoice was received on May 16, the last day the discount may be taken is on the?

May 24

The goods a business buys for resale to customers are known as

Merchandise

Form that serves as a record of cash received

Receipt

Business that sells to the final user

Retailer

Wal-Mart is an example of what

Retailer or merchandising business

The revenue account for a merchandising business

Sales

Price reduction granted by a business for damaged goods kept by the customers

Sales allowance

A cash discount issued by the seller

Sales discount

Permits a customer to pay for the merchandise at a later date

Sales on account

Merchandise returned to the seller for full credit

Sales return

A form that lists the details of a sale and is used as a record of the transaction

Sales slip

Many states and some cities require that a business add a_______ or a percentage of the selling price of the goods, at the time of the sale

Sales tax

Book that is summarized in a controlling account in the general ledger

Subsidiary ledger

Electrical supply companies, auto parts distributors, and food supply companies are examples of wholesalers

True

2/10, n/30 means that customers may deduct 2% of the cost of the merchandise if they pay within 10 days otherwise they must pay the full amount within 30 days

True

A proof is usually prepared at the end of each day to show that the amount of cash in the cash register equals the amount of cash sales recorded on the cash register tape.

True

A sales slips is usually prepared in multiple copies with the customer receiving the original and the businesses keep the remaining copies

True

Bankcard sales are recorded like cash sales because a business expects to receive its cash within a few days of the deposit

True

Business are required to act as agents for local and states government in the collection of taxes

True

Customer accounts are listed in alphabetical order in the accounts receivable subsidiary ledger

True

The account Merchandising inventory is classified in the chart of accounts as an asset

True

The cash register tape is the source document for the journal entry to record the day's cash sales

True

When a cash sale occurs, the details of the sales are printed on two tapes and the cash register at the same time.

True

Business that sells to retailers

Wholesaler


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