Chapter 4 Accounts

Flashcards covering basic accounting rules for debit and credit increases, journal entries for purchasing and selling merchandise, discounts, returns, allowances, freight, inventory adjustments, and closing entries.

Which accounts increase with a debit?

Assets, expenses, and dividends.

Which accounts increase with a credit?

Liabilities, equity, and revenue.

Bought merchandise on account: journal entry?

DR Merchandise Inventory; CR Accounts Payable.

Bought merchandise for cash: journal entry?

DR Merchandise Inventory; CR Cash.

Paid a supplier on account: journal entry?

DR Accounts Payable; CR Cash.

Sold merchandise on account: first entry?

DR Accounts Receivable; CR Sales.

Sold merchandise for cash: first entry?

DR Cash; CR Sales.

Sold merchandise: second entry?

DR Cost of Goods Sold; CR Merchandise Inventory.

Returned merchandise to supplier on account?

DR Accounts Payable; CR Merchandise Inventory.

Customer returns merchandise sold on account?

DR Sales Returns and Allowances; CR Accounts Receivable.

Resalable merchandise returned: inventory entry?

DR Merchandise Inventory; CR Cost of Goods Sold.

Customer gets an allowance on account?

DR Sales Returns and Allowances; CR Accounts Receivable.

Customer pays early with sales discount?

DR Cash; DR Sales Discounts; CR Accounts Receivable.

We pay supplier early with purchase discount?

DR Accounts Payable; CR Cash; CR Merchandise Inventory.

Buyer pays freight-in with cash?

DR Merchandise Inventory; CR Cash.

Seller pays delivery cost with cash?

DR Delivery Expense; CR Cash.

Physical inventory is less than recorded inventory?

DR Cost of Goods Sold; CR Merchandise Inventory.

How do you close Sales?

DR Sales; CR Income Summary.

How do you close expense accounts?

DR Income Summary; CR each expense account.

How do you close Income Summary for net income?

DR Income Summary; CR Retained Earnings.