Accounting Chapter 15/17 Vocabulary

The date an invoice must be paid is referred to as the due date. This is the deadline by which the payment should be made to avoid any late fees or penalties. It is an important date for both the seller and the buyer as it ensures timely payment and helps in managing cash flow effectively.

A purchase order is a written offer made by a buyer to a supplier, expressing the intention to purchase certain items. It serves as a legally binding document that outlines the details of the purchase, including the quantity, price, and terms of payment. The supplier can then use the purchase order to fulfill the order and generate an invoice for the buyer. A purchase order is an essential part of the procurement process, ensuring clear communication and agreement between the buyer and supplier.

The period of time within which an invoice must be paid in order to receive an amount off the invoice price is called the discount period. During this time frame, the buyer can avail a discount on the total amount mentioned in the invoice if the payment is made within the specified period.

A packing slip is a form that lists the items included in a shipment. It is used by the sender to provide detailed information about the contents of the package, including the quantity, description, and sometimes the value of each item. This document is essential for both the sender and the recipient to ensure that the correct items have been included in the shipment and to facilitate the process of unpacking and verifying the contents upon delivery.

A bank charges a fee for handling a business' bankcard sales slips. This fee is typically referred to as a bankcard fee. It is the amount that the bank charges for processing and managing the transactions made through bankcards. This fee covers the cost of the bank's services in handling the sales slips and ensuring smooth and secure transactions for the business.

A Debit Memorandum is a source document prepared by the buyer to notify the seller that the seller's account is to be decreased. It is used to record any adjustments made to the buyer's account, such as returns, allowances, or overpayments. This document serves as a record of the transaction and helps maintain accurate accounting records for both the buyer and the seller.

The cost of merchandise refers to the actual cost incurred by a business for the goods sold to customers. It includes the expenses associated with acquiring or producing the merchandise, such as the cost of raw materials, labor, and overhead. This cost is subtracted from the revenue generated by selling the merchandise to determine the profitability of the business.

When a buyer returns merchandise to the supplier and receives full credit, it is referred to as a "Purchases Return." This term is used to describe the process of returning goods that were previously purchased. The buyer is essentially reversing the initial purchase transaction and receiving a credit for the returned merchandise. This credit can be used to offset future purchases or be refunded to the buyer.

FOB Shipping Point is the correct answer because it indicates that the buyer is responsible for paying the shipping charges from the supplier's shipping point. FOB stands for "Free On Board," and in this context, it means that the buyer takes ownership and responsibility for the goods as soon as they are loaded onto the carrier at the supplier's shipping point. This means that the buyer is also responsible for any costs or risks associated with transporting the goods to their destination.

FOB Destination is the correct answer because when the supplier pays the shipping cost to the buyer's destination or location, it means that the supplier is responsible for the goods until they reach the buyer's specified location. This term is commonly used in shipping and trade agreements to determine who is responsible for the transportation and delivery costs. In FOB Destination, the supplier takes on the risk and cost of shipping, while in FOB Shipping Point, the buyer is responsible for these expenses. Transportation In and Processing Stamp are unrelated terms and do not apply to this scenario.

The correct answer is Accounts Payable Subsidiary Ledger. This ledger specifically tracks and records the accounts of all creditors and the corresponding amounts owed to them. It provides a detailed breakdown of the company's liabilities and helps in managing and monitoring the payment obligations towards creditors.

The correct answer is "Purchases Account." This account is used to record the cost of merchandise purchased during the fiscal period. It helps in tracking the expenses related to the purchase of inventory or goods for resale. The purchases account is a temporary account that is closed at the end of the accounting period to transfer the cost of goods sold to the income statement. It is an important account in the accounting cycle for businesses that engage in buying and selling goods.

The amount paid for insurance is called the "premium". This term refers to the cost or price that an individual or entity pays to an insurance company in exchange for coverage or protection against specified risks. The premium amount is determined based on various factors such as the type of insurance, coverage limits, deductibles, and the individual's risk profile. It is a regular payment made by the insured party to maintain their insurance policy and ensure that they are protected against potential losses.

Suppliers often offer credit customers a cash discount for early payment, which is known as a purchase discount. This discount incentivizes customers to pay their invoices promptly and helps improve the supplier's cash flow. By offering a purchase discount, suppliers can encourage customers to settle their debts earlier, reducing the risk of late or non-payments. This benefit is a common practice in business-to-business transactions, where suppliers provide credit terms to their customers.

An invoice is a document that lists the credit terms and the quantity, description, unit price, and total cost of the items shipped to the buyer. It is a bill or a request for payment from the seller to the buyer. The invoice provides a detailed breakdown of the transaction and serves as a record of the goods or services provided, their cost, and the terms of payment. It is typically sent by the seller to the buyer after the goods or services have been delivered or completed.

A tickler file is a system used to organize and remind someone of upcoming tasks or deadlines. In this case, the tickler file contains invoices to be paid, arranged by their due dates. This allows the person responsible for paying the invoices to easily keep track of which ones need to be paid and when they are due.

A business receives a "Purchases Allowance" when it keeps unsatisfactory merchandise but pays less than the original price. This means that the business is given a discount or a reduction in the price of the merchandise due to its unsatisfactory condition. This allows the business to keep the merchandise at a lower cost than the original price, compensating for any defects or issues.

A purchase requisition is a written request for a certain item or items to be ordered. This document is typically used within an organization to initiate the procurement process. It outlines the details of the requested items, such as quantity, description, and any specific requirements. The purchase requisition serves as a formal communication between the requesting department and the purchasing department, ensuring that the necessary items are procured in a timely manner and according to the organization's procurement policies.

A processing stamp is a tool used to mark invoices with a set of steps to be followed in order to process the invoice for payment. It serves as a reminder and guide for the person handling the invoice, ensuring that all necessary steps are completed accurately and in a timely manner. This helps to streamline the payment process and ensure that invoices are processed efficiently.