20 terms

Accounting for a merchandising business

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Terms in this set (...)

accounts payable ledger
A subsidiary ledger that lists the individual accounts of creditors. Also called the creditor's ledger.
cash discounts
Discounts offered by a seller to encourage early payments by a buyer. To the seller, cash discounts are sales discounts; to the buyer, cash discounts are purchase discounts.
cash payments journal
A special journal used for recording all disbursements of cash. Also called the cash disbursement journal
controlling account
An account the the general ledger that summarized accounts in a related subsidiary ledger.
cost accounts
Accounts that are presented on the income statements; used to determine the cost of goods sold to customers.
credit memorandum
A written statement that indicates a seller's willingness to reduce the amount owed by a buyer.
debit memorandum
The buyer's written request to a seller for credit for a merchandise return or allowance.
FOB destination
A shipping term that means that the seller is responsible foe all freight costs until the goods reach their destination.
FOB shipping point
A shipping term that means tha the buyer is responsible for all freight costs while the goods are in transit.
Freight In account
A general ledger account in which charges for freight on incoming merchandise are recorded. Also call Transportaion In.
general ledger
A ledger containing the financial statement accounts
invoice
A business document that contains the names and addresses of the buyer and the seller, the date and terms of the sale, a description of the goods, the price of the goods, and the mode of transportation used to ship the goods. The seller calls the invoice a sales invoice; the buyer calls it a purchase invoice
list price
The price appearing in a price catalog issued by the seller.
merchandise (or merchandise inventory)
Goods held for sale to customers. Also call stock in trade.
merchandising business
A business that earns it revenue by buying goods and then reselling those goods. Also called a trading business.
purchase order
A written order from a buyer of goods to the seller, listing items needed and a description of the goods.
purchase requisition
A written request for goods to be purchased. It is usally prepared by a department head or manager and sent to a firm's purchasing department.
Purchases account
A temporary owner's equity account that is used to record the cost of merchandise purchased for resale.
Purchase discounts accounts
A contra purchases account that records discounts received for prompt payment of merchandise
purchases jounal
A special journal used only to record credit purchases of merchandise.