Reversed Chapter (5)

Question 1

The form of balance sheet that resembles the basic format of the accounting equation; with assets on the left side and Liabilities and Stockholder’s Equity sections on the right side.

Answer 1

account form

Question 2

The subsidiary ledger containing the individual accounts with suppliers (creditors).

Answer 2

account form

Question 3

The subsidiary ledger containing the individual accounts with customers.

Answer 3

accounts receivable subsidiary ledger

Question 4

An analysis and updating of the accounts when financial statements are prepared.

Answer 4

administrative expense

Question 5

The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their writeoff.

Answer 5

allowances

Question 6

The account in the general ledger that summarizes the balances of the accounts in a subsidiary ledger.

Answer 6

controlling account

Question 7

The cost that is reported as an expense when merchandise is sold.

Answer 7

cost of merchandise sold

Question 8

Amount entered on the right side of an account.

Answer 8

credit memorandum

Question 9

The amount of time the buyer is allowed in which to pay the seller.

Answer 9

credit period

Question 10

Terms for payment on account by the buyer to the seller.

Answer 10

credit terms

Question 11

A variety of discounts offered by the seller as incentive for the customer to act in a way benefiting the seller.

Answer 11

customer discounts

Question 12

Sometimes called sales returns and allowances; these are returns to the seller by the customer or reductions from the initial selling price due to defective or damaged merchandise or goods that did not meet the customer’s expectations.

Answer 12

customer returns and allowances

Question 13

Amount entered on the left side of an account.

Answer 13

debit memorandum

Question 14

The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.

Answer 14

destination

Question 15

The primary ledger; when used in conjunction with subsidiary ledgers; that contains all of the balance sheet and income statement accounts.

Answer 15

general ledger

Question 16

Sales minus the cost of merchandise sold.

Answer 16

gross profit

Question 17

Cumulative preferred stock dividends that have not been paid in prior years are said to be in arrears.

Answer 17

income from operations

Question 18

A company’s ability to manage its inventory effectively.

Answer 18

inventory shrinkage

Question 19

A ledger containing individual accounts with a common characteristic.

Answer 19

inventory subsidiary ledger

Question 20

The bill that the seller sends to the buyer.

Answer 20

invoice

Question 21

A group of accounts for a business.

Answer 21

ledger

Question 22

Merchandise on hand (not sold) at the end of an accounting period.

Answer 22

merchandise inventory

Question 23

A method that allocated factory overhead to product by using factory overhead rates for each production department.

Answer 23

multiple-step income

Question 24

The process by which a company spends cash; generates revenues; and receives cash either at the time the revenues are generated or later by collecting an accounts receivable.

Answer 24

operating cycle

Question 25

Expenses that cannot be traced directly to operations.

Answer 25

other expense

Question 26

Revenue from sources other than the primary operating activity of a business.

Answer 26

other income

Question 27

The inventory system in which the inventory records do not show the amount available for sale or sold during the period.

Answer 27

periodic inventory system

Question 28

The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.

Answer 28

perpetual inventory system

Question 29

A detailed listing of merchandise on hand.

Answer 29

physical inventory

Question 30

Discounts taken by the buyer for early payment of an invoice.

Answer 30

purchases discounts

Question 31

Ratio that measures how effectively a company uses its assets; computed as net sales divided by average total assets.

Answer 31

ratio of sales to assets

Question 32

The form of balance sheet with the Liabilities and Owner’s Equity sections presented below the Assets section.

Answer 32

report form

Question 33

The total amount charged customers for merchandise sold; including cash sales and sales on account.

Answer 33

sales

Question 34

From the seller’s perspective; discounts that a seller may offer the buyer for early payment.

Answer 34

sales discounts

Question 35

Expenses that are incurred directly in the selling of merchandise.

Answer 35

selling expenses

Question 36

An overhead activity that consists of changing tooling in machines in preparation for making a new product.

Answer 36

shortage

Question 37

A form of income statement in which the total of all expenses is deducted from the total of all revenues.

Answer 37

single-step income statement

Question 38

Journals designed to be used for recording a single type of transaction.

Answer 38

special journals

Question 39

Performance goals; often relating to how much a product should cost.

Answer 39

statement

Question 40

A ledger containing individual accounts with a common characteristic.

Answer 40

subsidiary ledger

Question 41

Discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers.

Answer 41

trade discounts