Accounting Chapter 9 Test

What is a retail merchandising business?

A merchandising business that sells to those who use or consume the goods.

What is a wholesale merchandising business?

A business that buys and resells merchandise primarily to other merchandising businesses.

What does a share of stock represent?

Each unit of ownership in a corporation.

How is a corporation defined?

An organization with the legal rights of a person which many persons or other corporations may own.

Who is a stockholder?

The owner of one or more shares of stock.

What are articles of incorporation?

A legal document that identifies basic characteristics of a corporation.

What is a controlling account?

An account in a general ledger that summarizes all accounts in a subsidiary ledger.

What is a list price?

The retail price listed in a catalog or on an internet site.

What is a trade discount?

A reduction in the list price granted to a merchandising business.

What are terms of sale?

An agreement between a buyer and a seller about payment for merchandise.

What is periodic inventory?

A merchandise inventory evaluated at the end of a fiscal period.

What is a contra account?

An account that reduces a related account on a financial statement.

What is a requisition?

A form requesting the purchase.

What is perpetual inventory?

An inventory system that keeps ongoing track of inventory balances.

What is a purchase order?

A document that authorizes a purchase transaction.

What is a special journal?

A journal used to record specific types of transactions.

What is a cash discount?

A reduction in the amount to be paid if payment is made promptly.

What is a general amount column?

A column in a journal or ledger that records amounts not categorized elsewhere.

What is a credit limit?

The maximum amount of credit that a business extends to a customer.

What is a schedule of accounts payable?

A report detailing all amounts owed by a business to its creditors.

What is a discount period?

The time frame during which a discount is available for payment.

What is a purchased discount?

A reduction in the purchase price granted to a buyer.

What is a cash payment journal?

A special journal used to record all cash payments.

What is a due date?

The date by which payment is required.

What is a merchandise business?

A business that sells products to consumers.

What is capital?

The financial assets or resources owned by a business.

What is merchandise?

Goods that are bought and sold.

What is capital stock?

The shares of ownership in a corporation.

What is a charter?

A legal document that establishes a corporation.

Who is a vendor?

A person or business that sells goods or services.

What is a subsidiary ledger?

A ledger that contains a group of related accounts.

What is an accounts payable ledger?

A subsidiary ledger that tracks amounts owed to creditors.

What is inventory?

The goods and materials a business holds for sale.

What is merchandise inventory?

The total value of goods a business has for sale.

What is a physical inventory?

A count of all physical goods held in stock.

What is the cost of merchandise?

The purchase price of goods sold.

What is a purchase on account?

A purchase where payment is made on credit.

What is a purchases journal?

A special journal used to record purchase transactions.

What is a special amount column?

A column in a journal used to record amounts for specific purposes.

What is a purchase invoice?

A document that provides evidence of a purchase transaction.

What is a net price?

The price of an item after all discounts have been applied.