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    ACCOUNTING

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    trixie manito
    The document provides definitions and explanations of key accounting terms related to the closing process and merchandising businesses. Some key points covered include: closing accounts involves transferring balances to clear temporary accounts; closing entries must be journalized and posted; and the post-closing trial balance verifies that debits equal credits. Merchandising topics addressed contain: cost of goods sold is the largest expense; net cost of purchases includes discounts and transportation; and the purchasing cycle of procuring inventory for sale.

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    ACCOUNTING

    Uploaded by

    trixie manito
    28 views2 pages
    The document provides definitions and explanations of key accounting terms related to the closing process and merchandising businesses. Some key points covered include: closing accounts involves transferring balances to clear temporary accounts; closing entries must be journalized and posted; and the post-closing trial balance verifies that debits equal credits. Merchandising topics addressed contain: cost of goods sold is the largest expense; net cost of purchases includes discounts and transportation; and the purchasing cycle of procuring inventory for sale.

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    The document provides definitions and explanations of key accounting terms related to the closing process and merchandising businesses. Some key points covered include: closing accounts involves transferring balances to clear temporary accounts; closing entries must be journalized and posted; and the post-closing trial balance verifies that debits equal credits. Merchandising topics addressed contain: cost of goods sold is the largest expense; net cost of purchases includes discounts and transportation; and the purchasing cycle of procuring inventory for sale.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    28 views2 pages

    ACCOUNTING

    Uploaded by

    trixie manito
    The document provides definitions and explanations of key accounting terms related to the closing process and merchandising businesses. Some key points covered include: closing accounts involves transferring balances to clear temporary accounts; closing entries must be journalized and posted; and the post-closing trial balance verifies that debits equal credits. Merchandising topics addressed contain: cost of goods sold is the largest expense; net cost of purchases includes discounts and transportation; and the purchasing cycle of procuring inventory for sale.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Said to be closed when an entry is made such that its balance becomes zero.-closing account
    Final trial balance is called a _____________.-post closing trial balance
    The expense accounts have debit balances so to get rid of their balances we will do the opposite or
    credit the accounts.-close expense account
    Transferring the credit balances in the revenue accounts to a clearing account called Income
    Summary.-closing the revenue accounts
    Closing entries:- must be journalized and posted
    Preparing the closing trial balance may not be last step in the accounting cycle.-true
    The effect of posting this closing entry is to open the income summary account balance and to
    transfer the balance to Del Mundo’s capital account for the profit.-False
    The data for closing the income accounts can be found in the debit side of the income statement
    columns of the worksheet.-False
    Some entities elect to reverse certain end-of-period adjustment on the first day of the new period.-
    True
    Income Summary is a permanent account only used for the closing process.-False
    Journal entry which is the exact opposite of a related adjusting entry made at the end of the period-
    REVERSING ENTRY
    Key element of accrual basis accounting.-ADJUSTMENT PROCESS
    Helps in the identification of the accounts that need adjustments.-WORKSHEET
    Balance sheet accounts including assets, liabilities, and most equity accounts.-CLOSING
    ACCOUNT
    The expense accounts have debit balances so to get rid of their balances we will do the opposite or
    credit the accounts.-CLOSE EXPENSE ACCOUNTS
    Which of the following accounts should be closed to Income Summary?-ACCUMULATED
    DEPRECIATION
    The balances of the temporary accounts are transferred to the capital accounts.-TRUE
    Income is indicated by a credit balance and a loss by a debit balance.-FALSE
    The post-closing trial balance verifies that all the debits equal the credits in the trial balance.-TRUE
    The effect of posting this closing entry is to close the withdrawal account and to transfer the balance
    to the capital account.-FALSE
    The dual effect of the entry is to make the balances of the income accounts equal to zero.-TRUE
    Authorization made by the buyer to the seller to deliver the merchandise as detailed in the form.-
    PURCHASE ORDER
    A document issued by the carrier a trucking, shipping or airline that specifies contractual conditions
    and terms of delivery.-BILL OF LADING
    Evidences the receipt of cash by the seller or the authorized representative.-OFFICIAL RECEIPT
    A formal notice to the debtor detailing the accounts already due.-STATEMENT OF ACCOUNT
    Form used by the seller to notify the buyer that his account is being decreased due to errors or other
    factors requiring adjustments.-CREDIT MEMORANDUM
    A written request to the purchaser of an entity from an employee or user department of the same
    entity that goods be purchased.-PURCHASE REQUISITION
    Some businesses give discounts for prompt payment-CASH DISCOUNT
    Encourage the buyers to purchase the products because of markdowns from the list price-TRADE
    DISCOUNT
    The largest single expense of the merchandising business-COST OF GOODS SOLD
    Consist of gross purchases minus purchases discounts and purchases returns and allowances
    equals’ net purchases plus transportation costs.-NET COST OF PURCHASES
    Administration expenses make up the third major part of the income statement for a merchandising
    entity.-FALSE
    Every merchandising business has goods available for sale-TRUE
    Gross sales consist of total sales for check and on credit during an accounting period-FALSE
    The purchasing department and prepares a purchase order after checking with the price lists,
    quotations or catalogues of approved vendors.=TRUE
    When certain items are needed, the user department fills in a purchase order form and sends it to
    the purchasing department-FALSE
    The merchandising entity purchases inventory, sells the inventory and uses the cash to purchase
    more inventory and the cycle continues.-TRUE
    Official receipt is prepared by the seller of goods and sent to the buyer.-FALSE
    Upon receiving the shipment merchandise, the purchasers receiving department sees to it that the
    terms in the purchase order are complied with, and prepares a receiving report.-TRUE
    The length of the credit period varies across industries and may even vary within an entity,
    depending on the product.-TRUE
    The inventory account is continuously updated.-TRUE

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