Accounting Process: Chapter 9

Question 1

A person who buys and sells goods or merchandise is called a ___________.

Answer 1

Merchandiser

Question 2

A _______ is one who buys in bulk from a manufacturer or another wholesaler and ells them in bulk to other wholesalers or retailers.

Answer 2

Wholesaler

Question 3

A _______ buys merchandise from the manufacturer or wholesaler and sells them by piece to ultimate consumers.

Answer 3

Retailer

Question 4

It refers to goods purchased for resale in the normal course of business.

Answer 4

Merchandise Inventory

Question 5

This method records continuously or perpetually the movement of the merchandise and shows the inventory balance at any point in time.

Answer 5

Perpetual Method

Question 6

Under this method, there is no detailed recording hence no inventory balance can be determined at any point in time.

Answer 6

Periodic Method

Question 7

A physical count of goods.

Answer 7

Inventory Count

Question 8

It is a source document that contains a list of closing stock.

Answer 8

Inventory Sheet

Question 9

This follows the natural flow of the goods. It also means “first in - first out”.

Answer 9

FIFO Costing Method

Question 10

It is earned when the merchandiser transfers the goods to the customer.

Answer 10

Sales Revenue

Question 11

The sale is supported by a source document called an ______.

Answer 11

Invoice

Question 12

It is a percentage reduction from a published list price.

Answer 12

Trade Discount

Question 13

It is a discount that is meant to encourage a customer to pay immediately.

Answer 13

Cash Discount

Question 14

It is a business document issued by the seller informing the buyer that his account was decreased.

Answer 14

Credit Memorandum

Question 15

If it is the buyer who issues the document, instead of a seller, it is called a ________.

Answer 15

Debit Memorandum

Question 16

If the term is _____________, it means that title of ownership passes to the buyer as soon as seller turns over the goods to a common carrier.

Answer 16

FOB Shipping Point

Question 17

If the term is ________, the seller is liable for the freight and is still considered the owner of the goods until it reaches the buyer.

Answer 17

FOB Destination

Question 18

Each time a purchase is made, a 12% VAT is included increasing the amount to be paid by the buyer which must be debited to ________.

Answer 18

Input Tax

Question 19

Each time a sale is made, VAT is charged to the customer increasing the amount to be collected which is credited to ________.

Answer 19

Output Tax