accounting chapter 9 vocab & true and false

Question 1

merchandise

Answer 1

goods a business purchases to sell

Question 2

merchandising business

Answer 2

A business that purchases and resells goods

Question 3

retail merchandising business

Answer 3

A merchandising business that sells to those who use or consume the goods.

Question 4

wholesale merchandising business

Answer 4

buys and resells merchandise primarily to other merchandising businesses.

Question 5

corporation

Answer 5

An organization with the legal rights of a person which many persons or other corporations may own.

Question 6

capital

Answer 6

The assets or other financial resources available to a business.

Question 7

share of stock

Answer 7

A unit of ownership in a corporation.

Question 8

stock holder

Answer 8

The owner of one or more shares of stock.

Question 9

capital stock

Answer 9

The total shares of ownership in a corporation

Question 10

articles of incorporation

Answer 10

Defines how corporation is set up

Question 11

charter

Answer 11

the legal right for a business to conduct as a corporation.

Question 12

vendor

Answer 12

A business from which merchandise, supplies, or other assets are purchased.

Question 13

subsidiary ledger

Answer 13

a single general ledger account. (subledger)

Question 14

accounts payable ledger

Answer 14

contains vendor accounts.

Question 15

controlling account

Answer 15

summarizes all accounts in a subsidiary ledger(gen ledg)

Question 16

inventory

Answer 16

A list of assets, usually containing the value of individual items.

Question 17

merchandise inventory

Answer 17

has on hand for sale to customers.

Question 18

perpetual inventory

Answer 18

An inventory determined by records

Question 19

periodic inventory

Answer 19

A merchandise inventory evaluated at the end of a fiscal period.

Question 20

physical inventory

Answer 20

A periodic inventory conducted by counting, weighing, or measuring items of merchandise on hand.

Question 21

cost of merchandise

Answer 21

The amount a business pays for goods it purchases to sell.

Question 22

requisition

Answer 22

A form requesting the purchase of merchandise.

Question 23

purchase order

Answer 23

A form requesting that a vendor sell merchandise to a business.

Question 24

special journal

Answer 24

A journal used to record only one kind of transaction.

Question 25

purchase on account

Answer 25

A transaction in which the items purchased are to be paid for later.

Question 26

purchases journal

Answer 26

used to record only purchases of merchandise on account.

Question 27

special amount column

Answer 27

A journal amount column headed with an account title.

Question 28

purchase invoice

Answer 28

source document for recording a purchase on account transaction.

Question 29

terms of sale

Answer 29

How to pay for merchandise (agreement)

Question 30

due date

Answer 30

an invoice must be paid(date)

Question 31

cash payments journal

Answer 31

to record only cash payment transactions.

Question 32

list price

Answer 32

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

Question 33

trade discount

Answer 33

A reduction in the list price granted to a merchandising business.

Question 34

net price

Answer 34

the amount after the trade discount

Question 35

cash discount

Answer 35

A deduction that a vendor allows on an invoice amount to encourage prompt payment.

Question 36

general amount column

Answer 36

amount column that (no account title)

Question 37

discount period

Answer 37

cash discount for customers (period of time)

Question 38

purchases discount

Answer 38

cash discount for companys that buy merchindise

Question 39

contra account

Answer 39

reduces a related account on a financial statement

Question 40

credit limit

Answer 40

The maximum outstanding balance allowed to a customer by a vendor

Question 41

schedule of accounts payable

Answer 41

vendor accounts (accounts payable trial balance)

Question 42

controlling account

Answer 42

summarizes all accounts in a subsidiary ledger (general ledger)

Question 43

A corporation can incur liabilities but cannot own property.

Answer 43

false

Question 44

The articles of incorporation typically include the name and address of the business, its purpose for operating, any limitations on its activities and rules for dissolving the corporation.

Answer 44

true

Question 45

Unlike a proprietorship, a corporation exists independent of its owners.

Answer 45

true

Question 46

The total of accounts in the accounts payable ledger equals the balance of the controlling account, Accounts Payable.

Answer 46

true

Question 47

The accounts payable ledger form contains the same columns as the general ledger except that it lacks a Credit Balance column.

Answer 47

false

Question 48

The perpetual inventory method is easier to maintain than the periodic method. The perpetual method does not require records of the quantity and cost of individual goods.

Answer 48

false

Question 49

When a periodic inventory system is used, the cost of merchandise is recorded to Purchases.

Answer 49

true

Question 50

The income statement of a merchandising business places Purchases in a section titled Cost of Goods Sold, separate from other expenses.

Answer 50

true

Question 51

A purchase invoice lists the quantity, the description, and the price of each item and shows the total amount of the purchase.

Answer 51

true

Question 52

A transaction to record merchandise purchased with a trade discount would include a credit to Merchandise Discount.

Answer 52

false

Question 53

When journalizing a cash payment for advertising, the vendor’s name is written in the Account Title column of the cash payments journal.

Answer 53

false

Question 54

When supplies are purchased for use in the business, the amount is recorded as a debit to Purchases.

Answer 54

false

Question 55

The terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid within 15 days of the invoice date or the total invoice amount must be paid within 30 days.

Answer 55

true

Question 56

The contra account Purchases Discount has a normal credit balance.

Answer 56

true

Question 57

The petty cash account Cash Short and Over is a permanent account.

Answer 57

false

Question 58

Exceeding a vendor’s credit limit can cause a disruption in the company’s ability to purchase merchandise.

Answer 58

true

Question 59

A journal is proved and ruled whenever a journal page is filled, and always at the end of a month.

Answer 59

true

Question 60

The totals of the General amount columns of a cash payments journal are posted to the general ledger.

Answer 60

false

Question 61

The total of an accounts payable trial balance should equal the total of Accounts Payable.

Answer 61

true