ch 8 terrible acct 1301
Use of a purchase journal
saves time and effort keeps all credit purchases in one place
A list of all the balances owed to creditors, prepared to prove that the control account and the subsidiary ledger are equal, is called a _____
schedule of accounts payable
A temporary account used to record the cost of goods bought for resale during a period is called the___account
Purchases
A company purchases merchandise for $500 plus a freight charge of $50 from a supplier, payment is due in 30 days. This transaction will be recorded with which of the following entries
debit to freight in for $50 credit to accounts payable for $550 debit to purchases for $500
A company purchases merchandise for $1,000 plus a freight charge of $100 from a supplier, payment is due in 30 days. The $100 freight charge will be recorded as a (debit/credit) _______ to the _______ account
debit; freight in
The objectives of an internal control system include the following:
ensure that different people are involved in the process of buying, receiving goods, and making payments for same. create written proof that purchases and payments are authorized.
The cost of goods sold account is a(n) Multiple choice question.
expense
Transportation charges for items purchased is called the _________ account
freight in
When posting from the purchases journal to the general ledger, the following accounts will be posted:
freight in purchases accounts payable
Johnson Company returned damaged merchandise to a supplier. The merchandise was purchased on account. The journal entry to record this return includes a credit to:
purchases returns and allowances
All of the following are types of effective internal controls over purchases for a small business:
purchases should only be made after proper written authorization goods order should be carefully checked when received computations on the invoice should be checked for accuracy
The purchases journal records entries to which of the following accounts:
purchases, freight in, and accounts payable
The report prepared to show the quantity and condition of the goods received is called a _______ report.
receiving
When goods purchased arrive at the business, they are inspected. The report prepared to show the quantity and condition of the goods received is called a _____report
receiving
A form used to notify the purchasing department that items need to be ordered, is called a purchase
requisition
When the sales department needs goods, it sends a document listing the items to be ordered to the purchasing department; this document is called a purchase
requisition
Unsatisfactory goods which are returned, are called purchase
returns
A _____ is sent to the customer for items ordered.
sales invoice
The Purchase Returns and Allowances account is a contra cost of goods sold account, and the normal balance of this account is a (debit/credit) ________.
credit
A company shows the following balances in the general ledger: Purchases $10,000 Freight In $1,000 Purchases Returns and Allowances $500 The net delivered cost of purchases is:
$10,500
A --- ----is placed in the posting reference column in the purchases journal to indicate that the transaction is posted to the accounts payable subsidiary ledger.
check mark
When a buyer is offered a cash discount for payment within a specific period, such as 2/10, n/30, it is referred by the buyer as a
purchase discount
A _____ is a form received from the seller for items ordered and shipped
purchase invoice
A _____ account is used to record the cost of goods bought for resale during a period
purchases
Place the steps to post the totals from the purchases journal to the general ledger in correct order:
1.locate 2.enter posting reference such as p1 3.enter the amount 4.compute 5.in the purchases 6.repeate
The credit terms 2/10, n/30 means that if payment is made within _________days of the invoice date, the customer can take a ____________% discount. Otherwise payment in full is due in_________ day
Blank 1: 10 Blank 2: 2 Blank 3: 30
A_________ ____________ is placed in the posting reference column in the purchases journal to indicate that the transaction is posted to the accounts payable subsidiary ledger.
Blank 1: check Blank 2: mark
A company purchases merchandise for $600 plus a freight charge of $60 from a supplier, payment is due in 30 days. The $60 freight charge will be recorded as a (debit/credit)______ to the ______in account in the amount of $60.
Blank 1: debit Blank 2: freight or transportation
An account that records transportation charges for items purchased is called the
Blank 1: freight or transportation Blank 2: in
A bill that is received by a merchandiser for items ordered and shipped is called a
Blank 1: purchase Blank 2: invoice
A return of unsatisfactory goods is called a
Blank 1: purchase Blank 2: return
A supplier's billing document that is sent to the customer is referred to as a(n) .
Blank 1: sales Blank 2: invoice
Medium and large-sized firms often use a ____ ____to help insure effective internal control over purchase
Blank 1: voucher Blank 2: system
Johnson Company returned damaged merchandise to a supplier. The merchandise was purchased on account. The journal entry to record this return includes a debit to
accounts payable
A price reduction from the amount originally billed is called a purchase
allowance
True or false: A company's internal control process should ensure that the person buying and receiving goods is different from the person making payment.
True
An accounts payable subsidiary ledger is a subsidiary ledger that contains:
a separate account for each creditor
The actual cost to the business of the merchandise sold to customers is called __________.
cost of goods sold
The company's policies and procedures in place to safeguard assets, ensure reliability of accounting data, and promote compliance with management policies and applicable laws are called
internal controls
A special journal for credit purchases of merchandise is called a
purchases
Purchases of goods on credit are recorded in a(n)_______ journal.
purchases
When a supplier is offering a customer a cash discount for receipt of payment within a specific period, such as 2/10, n/30, it is referred by the supplier as a________ discount
sales
The purchases journal is used to record
the purchases of goods on credit
Place the steps to posting purchases returns and allowances to the creditor's account in the accounts payable ledger in correct order:
1. enter the date 2.enter the credit 3.in the posting 4.enter the amount 5.compute 6.check mark
Place the steps to posting a credit purchase to the account payable subsidiary ledger in correct order:
1.locate 2.enter 3.in the posting 4.enter the amount 5.place check