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Accounting Chapter 9
Accounting
| Question | Answer |
|---|---|
| What is capital stock? | Total shares of ownership in a corporation. |
| What is a cash discount? | A deduction that a vendor allows on the invoice amount to encourage prompt payment. |
| What is a corporation? | An organization with the legal rights of a person and which may be owned by many persons. |
| What is a debit memorandum? | A form prepared by the customer showing the price deduction taken by the customer for returns and allowances. |
| What is a purchase invoice? | An invoice used as a source document for recording a purchase on account transaction. |
| What is a purchase discount? | A cash discount on purchases taken by a customer. |
| What is a purchase return? | A journal used to record only one kind of transaction. |
| What is a retail merchandising business? | A merchandising business that sells to those who use or consume the goods. |
| What is a share of stock? | Each unit of ownership in a corporation. |
| What is a special journal? | A journal used to record only one kind of transaction. |
| Does a debit or credit increase the Purchases account? | Debit |
| When using several different journals, what is used in the ledger when posting to show which journal the information came from? | An abbreviation in the Post Reference column |
| Are trade discounts normally recorded? | NO, the invoice shows the already discounted price. |
| Does a debit or credit increase the Purchases Discount account? | Credit |
| If the actual petty cash on hand $72.00 but the records show that there should be $75.00 is the petty cash short or over? | Short |
| Purchase Returns and Allowances account is a contra account to what? | Purchases |
| What is the Historical Cost Accounting Concept? | Purchases are recorded at their cost, including any related shipping costs and taxes. |
| What does 1/10, n/30 mean? | Customer may deduct 1% if paid within 10 days or the net amount of the invoice is due in 30 days. |
| The purchase account is classified as what type of account? | A cost account |
| The source document for a cash purchase is what? | A check |
| Supplies bought for use in a business are recorded in what account? | Supplies |
| Contra accounts offset their related accounts and the balances are what? | Opposite the normal balances of their related accounts |
| The Purchases Returns and Allowances account effects the Purchases account by doing what? | Decreasing the amount of purchases |
| If merchandise with a list price of $1200.00 is purchased on account for $500.00 on August 1 and terms of sale are 2/10, n/30 and payment if made on August 17, what is the amount to be paid? | $500.00 |
Created by:
lbeddow
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