Flashcards in Chapter 5 Vocabulary Deck (41)
The form of balance sheet that resembles the basic format of the accounting equation; with assets on the left side and Liabilities and Stockholder’s Equity sections on the right side.
The subsidiary ledger containing the individual accounts with suppliers (creditors).
accounts receivable subsidiary ledger
The subsidiary ledger containing the individual accounts with customers.
An analysis and updating of the accounts when financial statements are prepared.
The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their writeoff.
The account in the general ledger that summarizes the balances of the accounts in a subsidiary ledger.
cost of merchandise sold
The cost that is reported as an expense when merchandise is sold.
Amount entered on the right side of an account.
The amount of time the buyer is allowed in which to pay the seller.
Terms for payment on account by the buyer to the seller.
A variety of discounts offered by the seller as incentive for the customer to act in a way benefiting the seller.
customer returns and allowances
Sometimes called sales returns and allowances; these are returns to the seller by the customer or reductions from the initial selling price due to defective or damaged merchandise or goods that did not meet the customer’s expectations.
Amount entered on the left side of an account.
The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.
The primary ledger; when used in conjunction with subsidiary ledgers; that contains all of the balance sheet and income statement accounts.
Sales minus the cost of merchandise sold.
income from operations
Cumulative preferred stock dividends that have not been paid in prior years are said to be in arrears.
A company’s ability to manage its inventory effectively.
inventory subsidiary ledger
A ledger containing individual accounts with a common characteristic.
The bill that the seller sends to the buyer.
A group of accounts for a business.
Merchandise on hand (not sold) at the end of an accounting period.
A method that allocated factory overhead to product by using factory overhead rates for each production department.
The process by which a company spends cash; generates revenues; and receives cash either at the time the revenues are generated or later by collecting an accounts receivable.
Expenses that cannot be traced directly to operations.
Revenue from sources other than the primary operating activity of a business.
periodic inventory system
The inventory system in which the inventory records do not show the amount available for sale or sold during the period.
perpetual inventory system
The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.
A detailed listing of merchandise on hand.