Create an account
a form prepared by the customer showing the price deduction taken by the customer for returns and allowances
an invoice used as a source document for recording a purchase on account transaction
credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable
credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable
retail merchandising business
a merchandising business that sells to those who use or consume the goods
wholesale merchandising business
a business that buys and resells merchandise to retail merchandising businesses
Why are there two account titles in the amount column of the purchases journal?
Because the same two account are always affected by purchases on account transactions.
What is the advantage of having special amount columns in a journal?
Time is saved because using special amount columns eliminates writing an account title in the Account Title column.
What is recorded in the general amount columns of the cash payments journal?
Cash payments transactions that do not occur often
What is the difference between purchasing merchandise and buying supplies?
A business purchases merchandise to sell but buys supplies for use in the business. Supplies are not intended for sale.
What is meant by terms of sale 2/10, n/30?
Two ten means 2% of the invoice amount may be deducted if the invoice is paid within 10 days of the invoice date. Net thirty means that the total invoice amount must be paid within 30 days.
When journalizing a cash payment to replenish petty cash, what is entered in the Account Title column of the cash payments journal?
The titles of the accounts for which the petty cash fund was used.
What is the usual balance of the account Cash Short and Over?
The balance is usually a debit because the petty cash fund is more likely to be short than over.
List the five steps for ruling a cash payments journal at the end of the month.
a. Rule a single line across all amount columns.
b. Write the date in the Date column.
c. Write Totals in the Account Title column.
d. Write each column total below the single line.
e. Rule a double line across all amount columns.
What journal is used to record transactions that cannot be recorded in special journals?
Why is a memorandum used as the source document when supplies are bought on account?
To note the invoice is for store supplies and not for purchase, ensuring that no mistake is made.
Why are two account titles written for the credit amount when supplies are bought on account?
Because the single credit amount is posted to two accounts.
When is the equality of debits and credits proved for a general journal?
After each general journal entry is recorded.
If purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account?
A business can track the amount or purchases returns and allowances in a fiscal period if a separate account is used.
What is a primary difference between a purchase returns and a purchases allowance?
A purchase return is credit allowed for the purchase price of returned merchandise. A purchases allowance is credit allowed for part of the purchase price of merchandise that is not returned.
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