College Accounting – A Practical Approach – 13th Edition Slater (JEG) Chapter 10 – Flashcards
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Purchases
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Account that records the cost of merchandise for resale. Debit Balance
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Purchases Returns and Allowances
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Contra-cost (credit balance) account that records amount for defective or unacceptable merchandise returned to suppliers. (Price reduction given for defective items)
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Purchase Discount
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Contra-cost (credit balance) that records discounts offered by vendors.
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F.O.B Destination (free on board)
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Freight charge seller is responsible for to the purchaser's destination.
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F.O.B Shipping Point (free on board)
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Freight charge purchaser is responsible for from the seller's shipping point to purchaser's location.
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Purchase Requisition
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Form used in a business asking the purchase department to buy specific goods.
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Purchase Order
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Form used in a business used to place an order for buying goods from a seller.
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Purchase Invoice
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Sales invoice sent to purchaser from the seller.
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Receiving Report
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Form used to verify the exact merchandise that was ordered and received in good condition.
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Invoice Approval Form
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Form used by accounting department to check and approve for recording and payment.
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Accounts Payable Subsidiary Ledger
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Book/File that contains the name of the creditor and amount owed from purchases on account. Listed in alphabetical order. Accounts Payable is the controlling account.
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Debit Memorandum
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Memo issued by customer to a seller that indicates the return or allowance has occurred.
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Controlling Account
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Account in the general ledger that summarizes or controls a subsidiary ledger. After postings are complete, it shows the total amount owed from purchases made on account.
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Perpetual Inventory System
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Inventory system that continually monitors its levels of inventory. Records units on hand at the beginning of the accounting period, units sold, and current balance after each sale or purchase.
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Periodic Inventory System
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Inventory system that, at the end of each accounting period, calculates the cost of the unsold goods on hand.
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Merchandise Inventory
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Asset and perpetual inventory system account that records purchases of merchandise. Discounts and returns are recorded in this account for the buyer.
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Costs of Goods Sold
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An account that records the cost of merchandise inventory used to make the sale. Used in a perpetual inventory system.
