Chapter 7 Terms Flashcards Preview

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Flashcards in Chapter 7 Terms Deck (23):
1

Service Business

A business which sells services.

2

Merchandising Business

A business which sells goods that it purchases.

3

Manufacturing Business

A business which sells goods that it produces.

4

Subsidiary Ledger

A subsidiary ledger is a ledger that contains accounts of a single type, such as customers or vendors.

5

Retail Business

A business which sells goods and services directly to individual customers.

6

Periodic Inventory System

In a periodic inventory system, the cost of inventory on hand must be determined by counting merchandise inventory in stock.

7

Perpetual Inventory System

In a perpetual inventory system, the amount of inventory on hand is adjusted for each sale, purchase, or return.

8

Merchandise Inventory

The stock of goods kept on hand.

9

Contra Revenue Account

An account with a debit balance, which is contrary to the normal balance for a Revenue Account.

10

Control Account

An account that links a subsidiary ledger and the general ledger since its balance summarizes the balances of the accounts in the subsidiary ledger.

11

Credit Memorandum

A note verifying that a customer’s account is being reduced by the amount of a Sales Return or Sales Allowance plus any sales tax that may have been involved.

12

Credit Terms

Terms for payment on credit by buyer to seller.

13

List Price

An established retail price.

14

Net Sales

The difference between the balance in the Sales account and the balance in the Sales Returns and Allowances account and the Sales Discount account.

15

Open Account Credit

A system that allows the sale of services or goods with the understanding that payment will be made at a later date.

16

Sales Allowance

A reduction in the price originally charged to customers for goods or services.

17

Sales Discounts

A Contra Revenue account where early payment discounts are recorded.

18

Sales Return

A firm’s acceptance of a return of goods from a customer.

19

Sales Returns and Allowances

A Contra Revenue account where sales returns and sales allowances are recorded.

20

Schedule of Accounts Receivable

A listing of all balances of the accounts in the Accounts Receivable subsidiary ledger.

21

Trade Discount

A reduction from list price.

22

Wholesale Business

A business that manufactures goods for or distributes goods to retail businesses or large consumers such as hotels and hospitals.

23

Accounts Receivable Ledger

A subsidiary ledger that contains credit customer accounts.