Chapter 10-12
A cash payments journal is a special journal used to record all of the following EXCEPT
An asset accept as payment by a supplier
Which of the following indicates that the purchaser will pay the transportation costs?
FOB shipping point
A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment is commonly referred to by the seller as a purchase invoice.
False
It is inefficient to record all cash payments in a general journal.
True
Purchase Returns and Allowances is the contra-purchases account to which purchases returns and purchases allowances are credited.
True
The sales account is credited for the selling price of merchandise sold during the period.
True
The supplier or vendor is the person or firm from whom the merchandise or other property is ordered.
True
The types of special journals a business uses should depend on the types of transactions that occur most frequently for a business.
True
A journal that is not used by a business is a
Cash flow journal
For the merchant, bank credit card sales are treated in a manner similar to
Cash sales
A summary accounts receivable account is called a(n)
Controlling account
The terms on an invoice are 4/15, n/30. This means that
a discount of 4% will be allowed if payment is made within 15 days from the date of the invoice.
If the seller permits merchandise to be returned or an allowance to be made, it is customary for the seller to issue a(n)
credit memorandum
Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $5.40. The sales account should be credited for
$90
An invoice in the amount of $916 is subject to a trade discount of 10% and credit terms of 3/10, n/30. The amount of the trade discount would be
$91.60
Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $6.40. The amount that should be added to Accounts Receivable would be
$96.40.
Which of the following credit terms allows a discount of 2% if payment is made within 10 days with the total amount of the invoice due within 60 days?
2/10, n/60
Assume the gross amount of an invoice is $200 and a trade discount of 10% is allowed. The amount to be entered in the accounting records would be
$180
To enter a cash sale, the journal entry includes
debiting Cash, crediting Sales, and crediting Sales Tax Payable.
Copies of a sales invoice are used to do all of the following EXCEPT
record the receipt of merchandise.
A journal designed for entering only purchases on account is called an accounts receivable journal.
False
Merchandise inventory at the beginning of the period minus purchases plus merchandise inventory at the end of the period equals cost of goods sold for the period.
False
Net sales less sales returns and allowances and sales discounts equal gross sales.
False
Postings to the accounts payable ledger should be made at the end of the month.
False
Sales Returns and Allowances is debited for the selling price, including sales tax, of any merchandise returned by customers.
False
A list showing the amount due to each supplier as of a specified date is known as the
Schedule of accounts payable
A schedule of accounts payable is used to prove that the sum of the accounts payable ledger balances equals the Accounts Payable balance in the general ledger.
True
After the posting of the accounts receivable ledger and the general ledger is completed, the total of the accounts receivable ledger balances should equal the Accounts Receivable balance in the general ledger.
True
If the amount of sales returns and allowances is large in proportion to gross sales, a weakness in the merchandising operations is indicated and the trouble should be determined and corrected.
True
To verify that the sum of the accounts receivable ledger balances equals the Accounts Receivable balance, a schedule of accounts receivable is prepared.
True
Trade discounts represent a reduction in the price of the merchandise and should not be entered in the accounts of either the seller or the buyer.
True
Transactions that are similar in type and recorded frequently are likely to have a special journal.
True
A business that purchases clothing, furniture, computers, or other products to sell to other businesses is a
Wholesale Business
A common approach to keeping a record of each customer's account receivable is to use a subsidiary accounts receivable ledger.
True
Merchandise inventory available at the beginning of the period plus cost of goods purchased minus merchandise inventory at the end of the period equals
Cost of goods sold
A sales ticket is a document created as evidence of a sale in a retail business.
True
A record used to keep the amount owed to each supplier is called a(n)
Accounts payable ledger
A printed price of a manufacturer or wholesaler that is subject to trade discounts is called
List Price
With a special journal, summary postings of column totals are made to appropriate accounts
Monthly
When purchasing merchandise for resale on account, record the transaction in the
Purchases journal
The source document of a sales transaction is called a
Sales Ticket
Special journals enable a substantial time savings and make for a more efficient posting process.
True
The accounts receivable ledger is simply a detailed listing of the same information that is summarized in the accounts receivable account in the general ledger.
True
To encourage customers who purchase merchandise on account to pay promptly, a cash discount is usually offered.
True
An invoice in the amount of $916 is subject to a trade discount of 10% and credit terms on 3/10, n/30. If the invoice is not paid within the discount period, the amount that would be paid to satisfy the invoice would be
$824.40
After the posting of the accounts payable ledger and general ledger is completed, the total of the accounts payable ledger balances should equal the general ledger balance of
Accounts payable
A common approach to keeping a record of each customer's accounts receivable is to use a(n)
Accounts receivable ledger
"S14" in the Posting Reference column of a general ledger account would indicate that amount came from the sales journal on the 14th of the month.
False
A written order by a buyer for merchandise or other property specified in a purchase requisition is known as a purchase invoice.
False
When a business uses a subsidiary accounts receivable ledger, there is no need to keep a summary accounts receivable account in the general ledger.
False
A written order by a buyer for merchandise or other property specified in a purchase requisition is known as a
Purchases order
The account in which the revenue earned from the sale of merchandise is entered is
Sales
A customer returns merchandise that was delivered in poor condition and that does not meet specification. The account that the seller would debit for the amount of the return is
Sales Returns and Allowances.
A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment is commonly referred to by the seller as the
Sales invoice
A journal designed for entering only sales on account is called the
Sales journal
A credit memorandum for $156 (sale price of merchandise $150; sales tax of $6) was issued to a customer for goods returned that had been purchased on account. To enter this transaction properly,
Sales would not be Debit
In entering in the books an invoice that involves a trade discount, the amount to be used is the net amount after the trade discount is subtracted.
True
Merchandise returned by the customer for a refund is called a sales return.
True
Most transactions entered in a special journal use a single line, with the debit and credit amounts indicated in special columns provided for each account.
True
Special discounts on list prices granted to different classes of customers are known as trade discounts.
True
