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Journalizing Purchases Using a Purchases Journal
Journalizing Cash Payments Using a Cash Payments Journal
Performing Additional Cash Payments Journal Operations
Journalizing Other Transactions Using a General Journal
Miscellaneous Vocabulary
100
A merchandising business that sells to those who use or consume the goods.
What is a retail merchandising business?
100
What is meant by the terms of sale 2/10, n/30?
Two percent of the invoice account may be deducted if the invoice is paid within ten days, but otherwise the total amount must be paid within thirty days.
100
Where and when is a check placed in the cash payments journal?
A check is placed in the post reference column when amounts are being brought forward or carried forward.
100
What journal is used to record transactions that cannot be recorded in specific journals?
General Journal
100
What is a contra account?
An account that reduces a related account on a financial statement.
200
What kind of transactions are recorded in a purchases journal?
Only purchases of merchandise.
200
What types of transactions are recorded in a cash payments journal?
Only cash payment transactions.
200
What happens if the petty cash box is short- meaning a few dollars might be missing?
In the cash payments journal, the account Cash short and over is debited.
200
What is the purpose of a memorandum for store supplies bought on account?
To make sure no mistake are made, noting that the invoice is for supplies and not purchases.
200
What is a purchase invoice?
A source document for recording a purchase on account transaction.
300
What are special amount columns in a journal used for?
They are used for frequently occuring transactions.
300
Why would a vendor offer a cash disount to a customer?
To encourage prompt payment.
300
When journalizing a cash payment to replenish petty cash, what is entered in the Account Title column of the cash payments journal? Also give an example.
The accounts that payments from the petty cash were made to, plus cash short and over if needed. For example Supplies-Office Advertising Expense Miscellaneous Expense Cash Short and Over
300
Why are two account titles written for the credit amount when supplies are bought on account?
So that the amount is posted in both the total accounts payable ledger and in the specific account payable (the account of the specific business that money is owed to).
300
What are terms of sale?
An agreement between a buyer and seller about payment for merchandise.
400
Why are there two account titles in the amount column of the purchases journal?
The amounts in the column need to be posted to both accounts.
400
What is recorded in the general amount columns of the cash payments journal?
Cach payment transactions that do not occur often, like monthly rent.
400
What is the usual balance of cash short and over?
There is no normal balance.
400
When is the equality of debits and credits proved for a general journal?
After each entry is recorded, the equality of debits and credits should be checked.
400
What is a debit memorandum?
A form prepared by the customer showing the price deduction taken by the customer for returns and allowances.
500
What is the advantage of having special amount columns in a journal?
Using the special amount columns eliminates writing the ledger account titles in the Account title column, which saves time.
500
What is the difference between purchasing merchandise and buying supplies.
Merchandise is usually purchased on account, so in the cash payments journal, its transaction usually involves accounts payable.
500
List the five steps for ruling a cash payments journal at the end of the month.
1) Rule a single line across all amount columns directly below the last entry to indicate that all columns are to be added. 2)ON the next line write the date, in the date column. 3)Write the word Totals in the Account Title column. 4) Write each column total below the single line. 5)Rule double lines across all amount columns to show that the totals have been verified as correct.
500
If purchases returns and allowances are a decrease in purcases, why are returns and allowances credited to a separate account?
Better information is provided if the amounts are credited to the separate account: purchases returns and allowances. A business can track the amount of purchases returns and allowances in a fiscal period if there is that separate account.
500
What is a vendor?
A business from which merchandise is purchased or supplies or other assets are bought.