accounting - chapter 15

A tickler file contains folders for each day of the month so invoices can be placed in the folders according to their due dates.

true

Shipping charges are considered to be a cost of merchandise

true

The Purchases account is increased by debits.

true

The Purchases account is used only to record the purchases of merchandise for resale.

true

The Transportation In account is classified as a cost of merchandise account.

true

A purchases returns and allowances transaction is posted only to the accounts payable subsidiary ledger

false

Accounts in the accounts payable subsidiary ledger have normal debit balances.

false

An invoice with terms of 2/10, n/30, dated June 17, must be paid by July 17 in order to take advantage of the cash discount.

false

Every purchase on account results in a debit to Accounts Payable.

false

Purchases Discounts is a contra account of Sales Discounts.

false

The Purchases account is a permanent account.

false

The balance of the Purchases Returns and Allowances account increases the Purchases account.

false

The decrease side of the Purchases Returns and Allowances account is a credit.

false

When journalizing a return of merchandise purchased on account, the subsidiary ledger account is written first, followed by a diagonal line and the general ledger controlling account.

false

The amount paid for insurance is called the ____.

premium

Information placed on an invoice that outlines a set of steps to be followed in processing the invoice for payment is a(n) ____.

processing stamp

A written offer to a supplier to buy certain items is called a(n) ____.

purchase order

A(n) ____ is a written request that a certain item or items be ordered.

purchase requisition

A business receives a(n) ____ when it keeps unsatisfactory merchandise, but pays less than the original price.

purchases allowance

Merchandise returned by the buyer to the supplier for full credit is a(n) ____.

purchases return

When the supplier pays the shipping cost to the buyer's destination or location, the term is called ____.

FOB destination

Shipping terms of ____ means that the buyer pays the shipping charge from the supplier's shipping point.

FOB shipping point

The account used to record the cost of merchandise purchased during the fiscal period is the ____.

Purchases account

A ledger that contains accounts for all creditors and the amount that is owed to each is the ____.

accounts payable subsidiary ledger

An amount charged by a bank for handling a business's bankcard sales slips is a(n) ____.

bankcard fee

The ____ is the actual cost to the business of the merchandise sold to customers.

cost of merchandise

The source document prepared by the buyer to notify the seller that the seller's account is to be decreased is called a(n) ____.

debit memorandum

The period of time within which an invoice must be paid in order to receive an amount off the invoice price is called a(n) ____.

discount period

The date an invoice must be paid is called the ____.

due date

A discount period begins on the date the charge customer receives the invoice.

false

A(n) ____ is a document that lists the credit terms and the quantity, description, unit price, and total cost of the items shipped to the buyer.

invoice

The form that lists the items included in a shipment is called a(n) ____.

packing slip

A cash discount that suppliers often offer credit customers for early payment is a(n) ____.

purchase discount

A(n) ____ contains invoices to be paid, arranged by their due dates.

tickler file

In a computerized accounting system, processing purchases on account is done in a manner similar to a manual system.

true

Purchases Returns and Allowances appears in the cost of merchandise section of the chart of accounts.

true