Purchasing Process
The Purchases Account
Purchases on Account
Purchases Returns & Allowances
Cash Payments
100
The first step in the purchasing process.
What is a purchase requisition.
100
The account used to record purchases of merchandise for resale to customers.
What is Purchases.
100
The number of days within which an invoice must be paid in order to recieve a cash or purchases discount.
What is the discount period.
100
Occurs when a business returns merchandise to a supplier for full credit (refund).
What is a purchases return.
100
This account is always credited as part of a cash payments entry.
What is cash in bank.
200
Lists items included in a shipment from a supplier.
What is a packing slip.
200
The account type of the purchases account.
What is temporary.
200
The general ledger controlling account for purchases on account.
What is Accounts Payable.
200
Occurs when a buyer is not satisfied with the quality of merchandise purchased; does not return the merchandise, but receives a reduced price.
What is a purchases allowance.
200
Insurance that is paid in advance is recorded in this account.
What is Prepaid Insurance.
300
A written offer to a supplier to buy specific items.
What is a purchase order.
300
This is the normal balance of the purchases account.
What is Debit.
300
An organizational tool for keeping track of invoices from suppliers.
What is a ticker file.
300
The source document for recording a purchases return or allowance.
What is a debit memorandum.
300
The supplier pays the shipping charges.
What is FOB destination.
400
Used by the accounting department to determine when an invoice should be paid, discount amount, and amount to be paid.
What is a processing stamp.
400
The increase side of the purchases account.
What is debit.
400
A subset of the accounts payable controlling account divided by supplier.
What is the accounts payable subsidiary ledger.
400
The normal balance for the Purchases Returns and Allowances account.
What is credit.
400
The buyer pays the shipping charges.
What is FOB shipping point.
500
This serves as the source document for a purchase of merchandise from a supplier.
What is a purchase invoice.
500
This is the account classification for the purchases account.
What is cost of merchandise.
500
A cash discount for making an early payment on account.
What is purchases discount.
500
The account classification for Purchases Returns and Allowances.
What is contra cost of merchandise account.
500
The source document for recording a bank card fee.
What is the monthly bank statement.
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