VOCABULARY
The max outstanding balance allowed to a customer by a vendor
credit limit
what is the normal balance of an expense account?
debit
Paid cash for supplies, $150
DR: Supplies $150
CR: Cash $150
In the Marvel movies, Stark Industries is this type of business organization that exists as its own legal entity, separate from Tony Stark.
corporation
The contra account, purchase discounts, has a normal debit balance
FALSE
it has a CR balance
a form requesting that a vendor sell merchandise to a business
purchase order
Is a Liability decreased by a debit or a credit?
debit
paid cash for electric bill, $300
DR: Utilities Expense $300
CR: Cash $300
This account represents how much money a store like Target paid for the inventory it sold during the year.
Purchases (COGS)
The total of the A/P subledger = the balance of the controlling account, A/P
TRUE
A journal used to record only one kind of transaction
special journal
What balance does Accounts Payable normally have?
credit
Paid cash on account with no trade discount, $2,000
DR: A/P $2,000
CR: Cash $2,000
Taylor Swift sells merchandise at her concerts. When an item is bought, the system automatically updated the inventory account each time, what type of inventory method is this?
perpetual
a merchandising business places the account Purchases in the Operating Expenses section of the income statement
False
purchases = COGS (it's own expense section on the IS)
a reduction in the list price granted to a merchandising business
trade discount
What is the normal balance of the purchase discount account?
credit
Paid cash on account to company for $2,400 covering order #15, less a 2% discount
DR: A/P $2,400
CR: Discount $48
Cash $2,352
In The Office, when Michael Scott officially turns the Michael Scott Paper Company into a real business, he would need to file these legal documents to formally create the corporation.
articles of incorporation
The petty cash account, Cash Short and Over is a temporary account
True
It is an expense account, which is closed at the end of the year or period
each unit of ownership in a corporation
share of stock
What type of account is purchase discounts?
contra-expense
Replenish petty cash fund of $200.
Supplies = $35,
ads = $50,
misc. = $42.
Cash on hand = $72
Ad Expense $50
Misc Expense $42
Cash Short & Over $1
CR: Cash $128
A vendor for Nike has the terms oe f sale 3/15, n/30. What does this mean?
That if they pay within 15 days they will get a 3% discount, otherwise they have 30 days to pay the full amt/balance
the total of a schedule of A/P less purchase discounts taken during a period = total of A/P
False
purchase discounts does not affect the schedule of A/P