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Chapter 9
Journalizing Purchases and Cash Payments
29
Accounting
11th Grade
12/12/2011

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Term
merchandise
Definition
Goods that a business purchases to sell.
Term
merchandising business
Definition
A business that purchases and sells goods.
Term
retail merchandising business
Definition
A merchandising business that sells to those who use or consume the goods.
Term
wholesale merchandising business
Definition
A business that buys and resells merchandise to retail merchandising businesses.
Term
corporation
Definition
An organization with the legal rights of a person and which many persons may own.
Term
share of stock
Definition
Each unit of ownership in a corporation or federal agency.
Term
capital stock
Definition
Total shares of ownership in a corporation.
Term
stockholder
Definition
An owner of one or more shares of a corporation.
Term
special journal
Definition
A journal used to record only one kind of transaction.
Term
cost of merchandise
Definition
The price a business pays for goods it purchases to sell.
Term
markup
Definition
The amount added to the cost of merchandise to establish the selling price.
Term
vendor
Definition
A business from which merchandise is purchased or supplies or other assets are bought.
Term
purchase on account
Definition
A transaction in which the merchandise purchased is to be paid for later.
Term
purchases journal
Definition
A special journal used to record only purchases of merchandise on account.
Term
special amount column
Definition
A journal amount column headed with an account title.
Term
purchase invoice
Definition
An invoice used as a source document for recording a purchase on account transaction.
Term
terms of sale
Definition
An agreement between a buyer and a seller about payment for merchandise.
Term
cash payments journal
Definition
A special journal used to record only cash payment transactions.
Term
cash discount
Definition
A deduction that a vendor allows on the invoice amount to encourage prompt payment.
Term
purchases discount
Definition
A cash discount on purchases taken by a customer.
Term
general amount column
Definition
A journal amount column that is not headed with an account title.
Term
list price
Definition
The retail price listed in a catalog or on a Internet site.
Term
trade discount
Definition
A reduction in the list price granted to customers.
Term
contra account
Definition
An account that reduces a related account on a financial statement.
Term
cash short
Definition
A petty cash on hand amount that is less than a recorded amount.
Term
cash over
Definition
A petty cash on hand amount that is more than a recorded amount.
Term
purchases return
Definition
Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's accounts payable.
Term
purchases allowance
Definition
Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable.
Term
debit memorandum
Definition
A form prepared by the customer showing the price deduction taken by the customer for returns and allowances.
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