ACC111 Ch 8 Quiz

Assuming a periodic inventory system, the journal entry to record the purchase on account of $900 of merchandise with freight of $65 prepaid and added to the invoice is:

debit Purchases $900, debit Freight in $65; credit Accounts Payable $965.

If a business pays $1,100 on account to a creditor, the effect of the payment is a decrease to cash and a:

decrease to accounts payable.

Assuming a periodic inventory system is used, purchases of supplies on credit that are to be used in the business are debited to:

supplies

The objective of internal control of purchases is to:

create written proof that purchases and payments are authorized.

When a payment is due is determined by the invoice date and the:

credit terms.

Hugh Snow, the buyer, returned merchandise to Farley Co., the seller. The entry on the books of Hugh Snow to record the return of merchandise assuming a periodic inventory system is used, would include a:

Credit to Purchase Returns and Allowances.

Which of the following statements is correct?

Purchases Discounts is a contra expense account with a normal credit balance.

On Jan. 3, Gourmet Cakes sold $15,000 of merchandise on account to Jerry Hines. On Jan. 10, Jerry returned $2,000 of the merchandise because they bought too much. Assuming the cost of the returned merchandise to Gourmet Cakes was $500 and they use a perpetual inventory system, the journal entry on Jan. 10, to record the return of the merchandise from Jerry Hines, would be:

Option C.

The amount of the purchases for a period is presented in:

the Cost of Goods Sold section of the income statement.

Assuming a periodic inventory system is used, freight charges on merchandise purchases should be debited to:

the Freight In account.

Nadal, Inc. owes Wozniaki Company $12,860 as of April 1. During April, Nadal, Inc. purchased $14,280 of merchandise from Wozniaki Company and made payments on account to Wozniaki Company totaling $9,160. The amount Nadal, Inc. owes Wozniaki Company on April 30 is:

$17,980.

Postings to the accounts payable ledger should be made:

Daily

On Oct 1, Jerry's Lighting purchased merchandise with a list price of $5,000 with credit terms of 1/10, n/30. On Oct 3, Jerry's returns $500 of the merchandise. Assuming a periodic inventory system is used and Jerry's pays the remaining amount owed on the purchase within the discount period, Jerry's journal entry to record the payment, would include:

a debit to Accounts Payable for $4,500.

On April 5, Fair Coffee, Inc. purchased merchandise with a list price of $1,000 and credit terms 2/10, n/30. On April 6, Fair Coffee returns $200 of the merchandise. Assuming Fair Coffee uses a perpetual inventory system, their journal entry on April 5, to record the purchase, would include:

a debit to Merchandise Inventory for $1,000.

When merchandise is ordered, the purchasing department issues a form called:

a purchase order.

When the sales department needs merchandise, it sends the purchasing department a form called:

a purchase requisition.

The Purchases account is:

a temporary account.

The total of the balances in the creditors' accounts should agree with the balance of:

the Accounts Payable account in the general ledger.

Which of the following accounts has a normal debit balance?

Purchases