Accounting Ch. 9 Cengage

Match the following accounting terms with their definitions

• An organization with the legal rights of a person which many persons or other corporations may own.

• accounts payable ledger

• A business that purchases and resells goods.

• charter

• Goods that a business purchases in order to sell.

• capital

• A merchandising business that sells to those who use or consume the goods.

• articles of incorporation

• A business that buys and resells merchandise primarily to other merchandising businesses.

• capital stock

Match the following terms to their definitions:

• A merchandise inventory evaluated at the end of a fiscal period.

• cash payments journal

• An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise.

• contra account

• The goods a business has on hand for sale to customers.

• cost of merchandise

• When a periodic inventory is conducted by counting, weighing, or measuring items of merchandise on hand.

• cash discount

• A list of assets, usually containing the value of individual items.

• credit limit

A corporation can incur liabilities but cannot own property. (p. 244)

• True

• False

The articles of incorporation typically include the name and address of the business, its purpose for operating, any limitations on its activities and rules for dissolving the corporation.

• True

• False

Unlike a proprietorship, a corporation exists independent of its owners. (p. 245)

• True

• False

The total of accounts in the accounts payable ledger equals the balance of the controlling account, Accounts Payable. (p. 246)

• True

• False

The accounts payable ledger form contains the same columns as the general ledger except that it lacks a Credit Balance column. (p. 247)

• True

• False

When a perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory.

• True

• False

The perpetual inventory method is easier to maintain than the periodic method. The perpetual method does not require records of the quantity and cost of individual goods.

• True

• False

When a periodic inventory system is used, the cost of merchandise is recorded to Purchases.

• True

• False