Chapter 9

vendor

A business from which merchandise is purchased or supplies or other assets are bought is called a vendor.

wholesale merchandising business

A business that buys and resells merchandise to retail merchandising businesses is called a wholesale merchandising business.

debit memorandum

A form prepared by the customer showing the price deduction taken by the customer for returns and allowances is called a debit memorandum.

retail merchandising business

A merchan- dising business that sells to those who use or consume the goods is called a retail merchandising business.

cash short

A petty cash on hand amount that is less than a recorded amount is called cash short

cash payments journal

A special journal used to record only cash payment trans- actions is called a cash payments journal.

purchases journal

A special journal used to record only purchases of mer- chandise on account is called a purchases journal.

purchase invoice

An invoice used as a source docu- ment for recording a purchase on account transaction is called a purchase invoice.

corporation

An organization with the legal rights of a person and which many persons may own is called a corporation.

stockholder

An owner of one or more shares of a corporation is called a stockholder.

general amount column

A journal amount column that is not headed with an account title is called a general amount column.

special journal

A journal used to record only one kind of transaction is called a special journal.

cash over

A petty cash on hand amount that is more than a recorded amount is called cash over.

purchases return

Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the cus- tomer's accounts payable, is called a purchases return.

Merchandising business

A business that purchases and sells goods is called a merchandising business.

purchases discount

A cash discount on purchases taken by a customer is called a purchases discount.

cash discount

A deduction that a vendor allows on the invoice amount to encour- age prompt payment is called a cash discount.

special amount column

A journal amount column headed with an account title is called a special amount column

trade discount

A reduction in the list price granted to customers is called a trade discount.

purchase on account

A transaction in which the merchandise purchased is to be paid for later is called a purchase on account.

contra account

An account that reduces a related account on a financial statement is called a contra account.

terms of sale

An agreement between a buyer and a seller about payment for merchandise is called the terms of sale.

purchases allowance

Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable, is called a purchases allowance.

share of stock

Each unit of ownership in a corporation is called a share of stock.

Merchandise

Goods that a business pur- chases to sell are called merchandise.

markup

The amount added to the cost of merchandise to establish the selling price is called markup

cost of merchandise

The price a business pays for goods it purchases to sell is called cost of merchandise.

capital stock

Total shares of ownership in a corporation are called capital stock.

list price

The retail price listed in a catalog or on an Internet site is called a list price.