accounting chapter 9

Goods that a business purchases in order to sell. (p. 244)

merchandise

A business that purchases and resells goods. (p. 244)

Merchandising business

A merchandising business that sells to those who use or consume the goods. (p. 244)

Retail merchandising business

A business that buys and resells merchandise primarily to other merchandising businesses. (p. 244)

wholesale merchandising business

An organization with the legal rights of a person which many persons or other corporations may own. (p. 244)

Corporation

The assets or other financial resources available to a business. (p. 244)

Capital

Each unit of ownership in a corporation. (p. 244)

Share of stock

The owner of one or more shares of stock. (p. 244)

Stockholder

The total shares of ownership in a corporation. (p. 244)

Capital stock

A legal document that identifies basic characteristics of a corporation. (p. 244)

articles of incorporation

The legal right for a business to conduct operations as a corporation. (p. 244)

Charter

A business from which merchandise, supplies, or other assets are purchased. (p. 246)

Vendor

A ledger that is summarized in a single general ledger account. (p. 246)

subsidiary ledger

The subsidiary ledger containing vendor accounts. (p. 246)

Accounts Payable Ledger

An account in a general ledger that summarizes all accounts in a subsidiary ledger. (p. 246)

Controlling Account

A list of assets, usually containing the value of individual items. (p. 249)

inventory

The goods a business has on hand for sale to customers. (p. 249)

merchandise inventory

An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise. (p. 249)

Perpetual inventory

A merchandise inventory evaluated at the end of a fiscal period. (p. 249)

periodic inventory

When a periodic inventory is conducted by counting, weighing, or measuring items of merchandise on hand. (p. 249)

physical inventory

The amount a business pays for goods it purchases to sell. (p. 250)

cost of merchandise

A form requesting the purchase of merchandise. (p. 251)

Requisition

A form requesting that a vendor sell merchandise to a business. (p. 251

purchase order

A journal used to record only one kind of transaction. (p. 251)

Special Journal

A transaction in which the items purchased are to be paid for later. (p. 252)

Purchase on Account

A special journal used to record only purchases of merchandise on account. (p. 252)

purchases journal

A journal amount column headed with an account title. (p. 252)

special amount column

An invoice used as a source document for recording a purchase on account transaction. (p. 252)

Purchase Invoice

An agreement between a buyer and a seller about payment for merchandise. (p. 252)

terms of sale

The date by which an invoice must be paid. (p. 252)

Due Date

A special journal used to record only cash payment transactions. (p. 260)

cash payments journal

The retail price listed in a catalog or on an Internet site. (p. 260)

List price

A reduction in the list price granted to a merchandising business. (p. 260)

Trade discount

The price after the trade discount has been deducted from the list price. (p. 260)

Net Price

A deduction that a vendor allows on an invoice amount to encourage prompt payment. (p. 260)

Cash Discount

A journal amount column that is not headed with an account title. (p. 260)

general amount column

The period of time during which a customer may take a cash discount. (p. 263)

discount period

When a company that has purchased merchandise on account takes a cash discount. (p. 263)

purchases discount

An account that reduces a related account on a financial statement. (p. 263)

Contra Account

The maximum outstanding balance allowed to a customer by a vendor. (p. 267)

Credit Limit

A listing of vendor accounts, account balances, and the total amount due to all vendors. (p. 272)

Schedule of accounts payable