Fill in the Blanks: Chapter Five

1. Goods acquired by a retailer for resale to others is called ____________merchandise inventory.

 

2. The ____________ salesaccount is used strictly to record revenues that relate to cash and credit sales of merchandise.

 

3. Once a return or allowance is authorized, the seller documents the transaction on a form known as a ____________credit memorandum.

 

4. The Sales Returns and Allowances account and the Sales Discount account are known as ____________contra- revenue accounts.

 

5. List price minus trade discounts equals ____________invoice price.

 

6. A ____________cash discount might be expressed as 2/10, n/30.

 

7. Beginning inventory plus net ____________purchases equals ____________goods available for sale. The later amount less ____________ending inventory equals cost of goods sold. Sales minus cost of goods sold equals ____________gross profit.

 

8. ____________Returns and ____________allowances are caused by factors such as arrival of merchandise in damaged condition, late arrival of ordered goods, and receipt of goods not ordered.

 

9. The ____________purchases discounts account is unique to the gross method of recording purchases (in contrast to the net method).

 

10. Under the net method of recording purchases, a missed discount would be recorded to the Purchases Discounts Lost account with a____________debit at the time of ____________payment.

 

11. If the buyer is to incur all freight charges, the terms are F.O.B. ____________shipping point.

 

12. An inventory system which maintains up-to-date account balances for inventory at all times is termed a ____________perpetual system.

 

13. An income statement approach which presents accounts by association (i.e., sales and cost of goods sold, etc.) is termed the ____________multi-step format.

 

14. ____________Selling expenses are those associated with the sale of merchandise, and ____________administrative expenses are those pertaining to management of the business.

 

15. To minimize the probability of error occurrence and improve the credibility of financial statements and reports, features known as ____________internal control are built into accounting systems.

 

16. A company's ____________control environment represents the combined effect of many factors on implementing, evaluating, and improving the effectiveness of specified firm policies.

 

17. ____________ Separation of dutiesmeans that incompatible duties like transaction authorization, transaction recording, and asset custody are performed by different employees within an organization.

 

18. Important forms such as checks, sales invoices, and purchase orders are usually serially ____________prenumbered.