Chapter 15
True
Shipping charges are considered to be a cost of merchandise.
False
When journalizing a return of merchandise purchased on account, the subsidiary ledger account is written first, followed by a diagonal line and the general ledger controlling account.
FOB destination
When the supplier pays the shipping cost to the buyer's destination or location, the term is called ____.
Packing Slip
The form that lists the items included in a shipment is called a(n) ____.
True
Purchases Returns and Allowances appears in the cost of merchandise section of the chart of accounts.
False
A purchases returns and allowances transaction is posted only to the accounts payable subsidiary ledger.
Purchases Allowance
A business receives a(n) ____ when it keeps unsatisfactory merchandise, but pays less than the original price.
Purchase Discount
A cash discount that suppliers often offer credit customers for early payment is a(n) ____.
False
A discount period begins on the date the charge customer receives the invoice.
Account Payable Subsidiary Ledger
A ledger that contains accounts for all creditors and the amount that is owed to each is the ____.
True
A tickler file contains folders for each day of the month so invoices can be placed in the folders according to their due dates.
Purchase Order
A written offer to a supplier to buy certain items is called a(n) ____.
Tickler File
A(n) ____ contains invoices to be paid, arranged by their due dates.
Invoice
A(n) ____ is a document that lists the credit terms and the quantity, description, unit price, and total cost of the items shipped to the buyer.
purchase requisition
A(n) ____ is a written request that a certain item or items be ordered.
False
Accounts in the accounts payable subsidiary ledger have normal debit balances.
Bankcard Fee
An amount charged by a bank for handling a business's bankcard sales slips is a(n) ____.
False
An invoice with terms of 2/10, n/30, dated June 17, must be paid by July 17 in order to take advantage of the cash discount.
False
Every purchase on account results in a debit to Accounts Payable.
True
In a computerized accounting system, processing purchases on account is done in a manner similar to a manual system.
processing stamp
Information placed on an invoice that outlines a set of steps to be followed in processing the invoice for payment is a(n) ____.
Purchases Return
Merchandise returned by the buyer to the supplier for full credit is a(n) ____.
False
Purchases Discounts is a contra account of Sales Discounts.
False
The decrease side of the Purchases Returns and Allowances account is a credit.
Discount Period
The period of time within which an invoice must be paid in order to receive an amount off the invoice price is called a(n) ____.
Debit Memorandum
The source document prepared by the buyer to notify the seller that the seller's account is to be decreased is called a(n) ____.
Due Date
Shipping terms of ____ means that the buyer pays the shipping charge from the supplier's shipping point.
False
The Purchases account is a permanent account.
True
The Purchases account is increased by debits.
True
The Purchases account is used only to record the purchases of merchandise for resale.
True
The Transportation In account is classified as a cost of merchandise account.
cost of merchandise
The ____ is the actual cost to the business of the merchandise sold to customers.
Purchases account
The account used to record the cost of merchandise purchased during the fiscal period is the ____.
Premium
The amount paid for insurance is called the ____.
False
The balance of the Purchases Returns and Allowances account increases the Purchases account.
Due Date
The date an invoice must be paid is called the ____.