Questions and Answers
What are goods that a business purchases to sell?
What is a business that purchases and sells goods called?
Merchandising Business
What is a merchandising business that sells directly to consumers called?
Retail Merchandising Business
What type of business buys and resells merchandise to retail merchandising businesses?
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What is an organization with the legal rights of a person called?
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What is each unit of ownership in a corporation referred to as?
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What term describes the total shares of ownership in a corporation?
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Who is an owner of one or more shares of a corporation?
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What is a journal used to record only one kind of transaction called?
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What is the price a business pays for goods it purchases to sell called?
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What is the amount added to the cost to determine the asking price?
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What do you call a business from which merchandise is purchased?
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What type of transaction involves purchasing merchandise to be paid for later?
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What is a special journal used to record only purchases of merchandise on account called?
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What do you call a journal amount column headed with an account title?
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What is an invoice used as a source document for recording a purchase on account transaction called?
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What is the agreement between a buyer and a seller about payment for merchandise called?
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What is a special journal used to record only cash payment transactions called?
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What is the deduction that a vendor allows on the invoice amount to encourage prompt payment?
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What is a cash discount on purchases taken by a customer called?
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What do you call a journal amount column that is not headed with an account title?
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What is the retail price listed in a catalog or on an internet site called?
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What is a reduction in the list price granted to customers called?
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What type of account reduces a related account on a financial statement?
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What do you call a petty cash on hand amount that is less than a recorded amount?
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What is a petty cash on hand amount that is more than a recorded amount called?
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What do you call a return of goods from the buyer to the seller for cash or credit?
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What is the credit allowed for part of the purchase price of merchandise that is not returned called?
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What is a form prepared by the customer showing the price deduction taken by the customer for returns and allowances?
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Study Notes
Merchandise and Types of Merchandising Businesses
- Merchandise refers to goods purchased by a business for resale.
- A merchandising business operates by buying and selling goods.
- Retail merchandising businesses sell directly to end consumers who use the goods.
- Wholesale merchandising businesses act as intermediaries, buying from manufacturers and selling to retail businesses.
Corporate Structure and Ownership
- A corporation is a legal entity owned by multiple individuals, granting them rights akin to a person.
- Ownership in a corporation is represented by shares of stock, which are units of ownership.
- Capital stock encompasses the total number of shares issued by a corporation.
- Stockholders are individuals or entities that own one or more shares of a corporation.
Journals and Accounting Entries
- A special journal is dedicated to recording only one type of transaction, streamlining record-keeping.
- The cost of merchandise reflects the price a business pays for goods intended for resale.
- Markup is the additional amount added to the cost of merchandise determining the selling price.
Purchasing and Payment Transactions
- A vendor is a business entity from which merchandise or supplies are purchased.
- Purchase on account refers to transactions where goods are paid for at a later date.
- A purchase journal tracks only the purchases of merchandise made on credit.
- Special amount columns within journals are titled, aiding organization of entries.
Invoices and Payment Terms
- A purchase invoice serves as a source document for recording purchases made on account.
- Terms of sale outline agreements between buyers and sellers regarding payment conditions for merchandise.
- The cash payments journal is specific for documenting cash payment transactions.
Discounts and Pricing
- A cash discount incentivizes prompt payment by offering a deduction from the invoice amount.
- Purchase discounts allow customers a reduction in cash payable on purchases.
- The list price is the retail price displayed in catalogs or online marketplaces.
- Trade discounts are reductions on the list price offered to specific customers.
Accounting Adjustments and Returns
- A contra account reduces the balance of a related account in financial statements.
- Cash short indicates a petty cash amount that is less than the recorded figure.
- Cash over reflects a petty cash amount that exceeds the recorded figure.
- A purchase return occurs when goods are returned to the seller for cash or credit.
- A purchases allowance credits the buyer for price reductions on goods that were not returned.
- A debit memorandum is a form indicating price deductions taken by customers for returns or allowances.
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Description
Test your knowledge of key accounting terms in Chapter 9 through this interactive flashcard quiz. Perfect for students looking to master essential vocabulary related to merchandising businesses. Enhance your understanding of concepts like merchandise and retail versus wholesale operations.
