chapter 9 test

Question 1

an organization with the legal rights of a person and which many persons may own

Answer 1

corporation

Question 2

each unit of ownership in a corporation

Answer 2

share of stock

Question 3

total shares of ownership in a corporation

Answer 3

capital stock

Question 4

an owner of one or more shares of a corporation

Answer 4

stockholder

Question 5

the price of a business pays for goods it purchases to sell

Answer 5

cost of merchandise

Question 6

the amount added to the cost of merchandise to establish the selling price

Answer 6

markup

Question 7

a business from which merchandise is purchased or supplies or other assets are bought

Answer 7

vendor

Question 8

a transaction in which the merchandise purchased is to be paid for later

Answer 8

purchase on account

Question 9

an invoice used as a source document for recording a purchase on account transaction

Answer 9

purchase invoice

Question 10

an agreement between a buyer and a seller about payment for merchandise

Answer 10

terms of sale

Question 11

a special journal used to record only cash payment transactions

Answer 11

cash payments journal

Question 12

a deduction that a vendor allows on the invoice amount to encourage prompt payment

Answer 12

cash discount

Question 13

a cash discount on purchases taken by a customer

Answer 13

purchases discount

Question 14

the retail price listed in a catalog or on an internet site

Answer 14

list price

Question 15

a reduction in the list price granted to customers

Answer 15

trade discount

Question 16

an account that reduces a related account on a financial statement

Answer 16

contra account

Question 17

credit allowed for the purchase of returned merchandise, resulting in a decrease in the customer’s accounts payable

Answer 17

purchases return

Question 18

credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s accounts payable

Answer 18

purchases allowance

Question 19

a form prepared by the customer showing the price deduction taken by the customer for returns and allowances

Answer 19

debit memorandum