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