Accounting Chapter 14 Review

True

(True or False) The revenue account for a merchandising business is usually called Sales.

False

(True or False) The source documents for recording cash sale transactions and cash receipts from charge customers are the same.

True

(True or False) When a diagonal line is placed in the Posting Reference column of the general journal, it indicates that the amount is posted twice—once to a controlling account and once to a subsidiary ledger account.

False

(True or False) When a retail merchandising business sells goods to a customer, the amount of the sold merchandise is credited to the Merchandise Inventory account.

True

(True or False) If Marie Lacey's account was incorrectly credited instead of Maria Lopez's account in the accounts receivable subsidiary ledger, a correcting entry must be recorded in the general journal.

False

(True or False) Credit memos result in credits to or increases in customer accounts.

sales slip

A(n) ____ is a form that lists the details of a sale: the date of the sale, the name of the customer, and the description, quantity, and price of the goods sold.

credit memorandum

A(n) ____ is a source document prepared by the seller to notify a charge customer that the customer's account will be decreased by the amount of a return or allowance.

bankcard

A(n) ____ is issued by a bank and is honored by many businesses.

sale on account

A(n) ____ occurs when a customer buys an item with a promise to pay for it later.

cash receipt

A(n) ____ refers to cash that is received by a business.

cash sale

When a customer pays for merchandise in full at the time of purchase, the transaction is called a ____.

True

(True or False) Bankcard sales are recorded like cash sales because a business expects to receive its cash within a few days of the deposit.

True

(True or False) Cash discounts are offered by a business to encourage charge customers to pay promptly.

False

(True or False) In both manual and computerized accounting systems, charge customers' accounts do not have account numbers.

True

(True or False) Sales taxes collected by a business represent a liability until they are paid.

True

(True or False) The Sales Returns and Allowances account is important to a business because it shows the amount of credit granted to dissatisfied customers.

True

(True or False) The balance side of any contra account is always on the side opposite the balance side of the account it decreases.

False

(True or False) The increase side of the account Sales Discounts is a credit.

merchandising business

A business that buys goods and then sells those goods to customers for a profit is called a(n) ____.

wholesaler

A business that sells to retailers is called a(n) ____.

retailer

A business that sells to the final user is known as a ____.

receipt

A form that serves as a record of cash received from a charge customer is called a ____.

subsidiary ledger

A ledger or book of accounts that is summarized in a controlling account in the general ledger is called a(n) ____.

sales tax

A levy imposed by most states on the retail sales price of goods and services is a(n) ____.

sales allowance

A price reduction offered to a customer who keeps damaged or defective merchandise is a(n) ____.

sales discount

A reduction in a sales invoice that is given to a customer for prompt payment is a ____.

accounts receivable subsidiary ledger

A(n) ____ contains accounts for all charge customers.

credit card

Charge customers often use a(n) ____ when they make a purchase on account.

sales return

Full credit or a cash refund granted by a merchant to a customer for unsatisfactory merchandise is a(n) ____.

controlling account

The balance of a(n) ____ must agree with the balance of the accounts in its related subsidiary ledger.

charge customer

The customer to whom a sale on account is made is called a(n) ____.

before

The discount is on the price of merchandise ____ taxes.

merchandise

____ are the goods a business buys for resale to its customers.

inventory

____ refers to the items of merchandise a business has in stock.

credit terms

____ set out the time period for a customer to make full payment of an invoice.