Accounting - Chapter 9

Purchase Discounts

100

What does 4/15 N/45 mean? 

The company will receive a 4% discount if they pay their bill within 15 days, but they much pay the full bill within 45 days. 

200

A cash discount encourages

A Large orders
B Prompt payment
C Returns
D Higher prices

B Prompt payment

300

How does a merchandising business make a profit?

By selling their purchased goods at a higher price than they sold them at

400

Paid Organic Supplies for inventory purchased on account, 40,000
Terms 5/10 n/60
Paid within discount period

Journalize the payment

Debit: 

Accounts Payable - Organic Supplies: $40,000

Credit:

Cash:$38,000

Purchases Discount: $2,000

Cost of Goods

100

What type of account is Cost of Goods Sold? 

(asset, liability, equity, expense, asset)

Expense

200

Which of the following is included in Cost of Goods Sold
A Advertising
B Shipping Costs
C Office rent
D Utilities

B: Shipping Costs

300

When a merchandising business sells goods, how many accounts are affected at minimum? 

4

Cash/AR, Sales, Cost of Goods Sold, Inventory

400

Under the perpetual inventory method, the inventory  account is updated

A: Each time a sale occurs  

B: After a physical inventory account 

C: annually 

D: monthly

A: Each time a sale occurs  

Misc. Accounting

100

The owner of one or more shares of stock

A: shareholder

B: creditor 

C: lessor 

D: auditor

A: shareholder

200

Which ledger lists individual vendor balances

A General ledger
B Accounts receivable ledger
C Accounts payable ledger
D Purchases journal

C - Accounts payable ledger

300

Explain the difference between a perpetual accounting system and a periodic accounting system. 

Perpetual: An inventory counting method determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise.

Periodic: an accounting method that updates inventory records and calculates the cost of goods sold (COGS) at specific, set intervals—such as monthly, quarterly, or annually, rather than in real-time

 

400

A legal document that identifies basic characteristics of a corporation 

A: charter 

B: 10k

C: Articles of Incorporation

D: Purchase Discount

C: Articles of Incorporation