accounting unit 9

Service business

A business that provides services to customers instead of physical products

Merchandising business

A business that purchases and resells goods

Retail business

Merchandising business that sells to those who use or consume the goods

Wholesale business

Buys and resells merchandise primarily to other merchandising business

Merchandise inventory

The goods a business has on hand for sale to customers

Perpetual inventory

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

Periodic inventory

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

Purchase requisition

A form of requesting the purchase of merchandise

Purchase order

A form requesting that a vendor sell merchandise to a business

Purchase invoice

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

Terms of sale

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

Trade discount

A reduction in the list price granted to a merchandising business

Cash discount

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

Discount of 2% if paid within 10 days; full amount due in 30 days

What does 2/10, n/30 mean

Contra account

An account that reduces a related account on a financial statement

Controlling account

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

Accounts payable subsidiary ledger

a record that shows individual balances owed to each supplier.

Schedule of accounts payable

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

General journal

Journal for all other transactions

Cash payments journal

Journal for all cash payments

Special journals

A journal used to record only one kind of transaction