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Accounting II
Vocab for Ch. 18
| Question | Answer |
|---|---|
| Corporation | an organization with the legal rights of a person and which may be owned by many persons |
| Share of stock | each unit of ownership in a corporation |
| Capital Stock | total shares of ownership in a corporation |
| List Price | a business's printed or catalog price |
| Trade Discount | a reduction in the list price granted to customers |
| Cash Discount | a deduction that a vendor allows on the invoice amount to encourage prompt payment |
| Purchases Discount | a cash discount on purchases taken by a customer |
| Contra Account | an account that reduces a related account on a financial statement |
| Cash Short | a petty cash on hand amount that is less than a recorded amount |
| Cash Over | a petty cash on hand amount that is more than a recorded amount |
| Purchases Return | credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable |
| Purchases Allowance | credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable |
| Debit Memorandum | a form prepared by the customer showing the price deduction taken by the customer for returns and allowances |
| Business entity | Financial information is recorded and reported separately from the owner's personal financial information. |
| Purchases Journal | a special journal used to record only purchases of merchandise on account |
| Cash Payments Journal | a special journal used to record only cash payment transactions |
| Sales Journal | a special journal used to record only sales of merchandise on account |
| Cash Receipts Journal | a special journal used to record only cash receipt transactions |
| Account Payable | a liability account that summarizes the amounts owed to all vendors |
| Historical Cost | The actual amount paid for merchandise or other items bought is recorded. |
| 2/10, n/30 (two ten, net thirty) | 2% of the invoice may be deducted if the invoice is paid within 10 days of the invoice date. the total invoice amount must be paid within 30 days. |
| Petty Cash Fund | an amount of cash kept on hand and used for making small payments |
| Objective Evidence | A source document is prepared for each transaction. |
Created by:
jralston
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