Question

Some questions from my accounting review.

1. The net method of recording purchases refers to what.

2. You’re given a catalogue price for merchandise, what is the cost of the merchandise to you if there is a trade discount and credit terms. What is your inventory costs?

3. What is the current periods ending inventory? **All goods held for sale. Next periods beginning inventory.**

4. Beginning inventory plus purchases equals what?

5. Expenses report the overall operations of a business, including the expenses including HR, accounting, and management be under.

6. What are cash equivalence?

7. Outstanding checks refer to checks that have been what?

8. The person who signs a note receivable and promises to pay is called what?

9. Separate accounts receivable for each customer is important because

10. Asked to do a journal entry for the allowance method of accounting to write off $3,000 dollars that is un-collectable from a customer.

Answer 1

1. Net method of recording purchases refers to the recording of purchase net of discount i.e. after deducting discount amount from the purchases. Generally purchase transaction are on credit basis. Sometimes a cash discount is given if payment is made within a certain period of time. Now purchases are recorded as if payment is made within that discount period i.e. of net amount. And if actual payment is made after discount than discount provided will be reversed to arrive at the actual amount.