Vocabulary

**Merchandise**

goods that a business purchases to sell

**Merchandising business**

a business that purchases and resells goods

**Retail merchandising business**

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

**Wholesale merchandising business**

buys and resells merchandise primarily to other merchandising businesses

**Corporation**

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

Capital

the assets or other financial resources available to a business

Share of stock

each unit of ownership in a corporation

Stockholder

the owner of one or more shares of stock

Capital stock

the total shares of ownership in a corporation

**Articles of incorporation**

a legal document that identifies basic characteristics of a corporation, is a part of the application submitted to a state to become a corporation

Charter

a state approves the formation of a corporation by issuing

Vendor

a business from which merchandise, supplies, or other assets are purchased

**Subsidiary ledger**

a ledger that is summarized in single general ledger account

**Accounts payable ledger**

the subsidiary ledger containing vendor accounts

**Controlling account**

an account in a general ledger that summarizes all accounts in a subsidiary ledger

Inventory

a list of assets, usually containing the value of individual items

**Merchandise inventory**

the goods a business has on hand for sale to customers

**Perpetual inventory**

an inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise

**Periodic inventory**

a merchandise inventory evaluated at the end of a fiscal period

**Physical inventory**

when a periodic inventory is conducted by counting, weighing, or measuring items of merchandise on hand

**Cost of merchandise**

the amount a business pays for foods it purchases to sell

**Requisition**

a form requesting the purchase of merchandise

**Purchase order**

a from requesting that a vendor sell merchandise to a business

Special Journal

a journal used to record only one kind of transaction

Special amount column

are used for frequently occurring transaction

Purchase on account

a transaction in which the items purchased are to be paid for later

Purchases journal

a special journal used to record only purchases of merchandise on account

Purchase invoice

an invoice used as a source document for recording a purchase on account transaction

Term of sale

an agreement between a buyer and a seller about payment for merchandise

Due date

the date by which an invoice must be paid

Cash payments journal

is a special journal used to record only cash payment transactions

List price

the retail price listed in a catalog or on an Internet site

Trade discount

is a reduction in the list price granted to a merchandising business

Net price

the price after the trade discount has been deducted from the list price

Cash discount

is a deduction that vendor allows on an invoice amount to encourage prompt payment

General amount column

a journal amount column that is not headed with an account title

Discount period

the period of time during which a customer may take a cash discount

Purchases discount

when a company that has purchased a merchandise on account takes a cash discount

Contra account

an account that reduces a related account on a financial statement

Credit limit

is the maximum outstanding balance allowed to a customer by a vendor

**Schedule of accounts payable**

a listing of vendor accounts, account balances, and the total amount due to all vendors