CA chapter 7

a firm that sells goods that it purchases for resale is a : a) service business b) merchandising business c) manufacturing business d) non profit business

merchandising business

in a firm that uses special journals, an additional cash investment received from the owner is recorded in the: a) cash receipts journal b) sales journal c) cash payment journal d) general journal

cash receipt journal

in a firm that uses special journals, the collected of sums on account from credit customers is recorded in the: a) cash pyt journal b) cash receipts journal c) sales journal d) purchases journal

cash receipt journal

**the sales returns and allowances account has a normal ___ balance

debit

**a business that sells goods and services directly to individual consumers is called a(n) ___ business

retail

**the source document for an entry in the sales journal is a(n)

sales slip

**a list of all unpaid balances in the acct receivable sub ledger is called a(n) ____ of accounts receivable

schedule

**a(n) ___ journal is a journal that is used to record only one type of transaction

special

**a ledger that contains accounts of a single type is called a(n) ___ ledger

subsidiary

a retailer recorded the following in June: cash sales 2000 credit sales 9000 sales returns 1000 Assuming tax rate is 7% the entry to record sales tax pyt includes a debit to sales tax payable for:

$700

in a firm that uses special journals, an allowance given for damaged merchandise is recorded in the : a) cash pyt journal b) cash receipts journal c) purchases journal d) general journal

general journal

**when an account receivable sub ledger is used, the AR account in the general ledger is considered to be a(n) ___ account

control

**the entry to record a sale of merchandise on credit that is subject to sales tax includes a(n) ___ to sales tax payable

credit

**a(n) ___ is a business form that is issued to a credit customer upon acceptance of the return of damaged goods

credit memo

The sales returns and allowances account is presented

on the income statement as a deduction from sales

which statement is not correct? a) posting to AR sub ledger are usually made once a month on last day b) before posting to sub ledger the equality of debits and credits are proved by comparing column totals c) before posting to general ledger the equality of debits and credits recorded in sales journal are proved by comparing column totals d) when special journal used, post to AR in general ledger are usually made once a month on last day of the month

posting to AR sub ledger are usually made once a month on last day

the amount used by wholesalers to record sales in its sales journal is

the net price

the abbreviation S1 in the Posting Reference shows that the data was posted from page 1 of the sales journal

true

the sales returns and allowances account has a normal debit balance

true

a wholesale business sells goods with a list price of $900 and a trade discount of 40%. the net price is

$540.

merchandise is sold on credit for $600 plus 5% sales tax. The entry in the sales journal will include a debit to AR for: a)600 b) 603.50 c) 605.50 d) 630.

$630.

the sales returns and allowances account is classified as

a contra revenue acct

the entry to record a return by a credit customer of defective merchandise on which no sales tax charged includes:

a debit to sales returns and allowances and a credit to AR

**the ___ ledger contains accounts for credit customers

accounts receivable

in a firm that uses special journals, the issuance of a check to pay a creditor on account is recorded in the : a) cash pyt journal b) cash receipts journal c) sales journal d) purchases journal

cash payments journal

in a firm that uses special journals, the sale of merchandise for cash is recorded in the: a) cash pyt journal b) cash receipt journal c) sales journal d) purchases journal

cash receipts journal

**to indicate that an amount has been posted from the sales journal to the accounts receivable subsidiary ledger, a(n) ___is placed in the Posting reference column of the journal

check mark

The balance of a customer's account in the accounts receivable ledger is circled to show that it is a debit amount.

false

a merchandising business sells goods that it produces

false

a sales return or a sales allowance is usually recorded in the sales journal

false

in a firm that uses special journals, the purchase of merchandise on credit is recorded in the: a) cash pyt journal b) cash receipts journal c) purchases journal d) general journal

purchases journal

Sales account is classified as a(n): a) liability acct b) asset acct c) contra acct d) revenue acct

revenue acct

which of following statements is correct? a) sales journal is used for recording both cash and credit sales b) since the sales journal is used for single purpose there is no need to enter any description c) to provide audit trail, sales on credit should be recorded in both sales and general journal d) complete information for each sale of merchandise on credit can be recorded on one line of the cash receipt journal

since the sales journal is used for single purpose there is no need to enter any descriptions

To find the balance due from an individual customer, the accountant would refer to

the AR sub ledger

After all postings have been made, the total of the schedule of accounts receivable should equal

the balance of the AR account in the general ledger

in sales journal used to record taxable sales the total of AR column should equal:

the sum of totals of sales tax payable and sales column

**the reductions from list prices that many wholesale businesses offer their customers are called ___ discounts

trade

After all postings have been made, the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger.

true

a customer who returns goods or receives an allowance is entitled to a credit for the appropriate amount of sales tax if tax was charged on the original sale

true

in some states a firm receives a discount for paying the amount of sales tax due on time

true

the individual amounts in the AR debit column of a sales journal should be posted to the accounts receivable subsidiary ledger and the column total should be posted to the AR account in the general ledger

true

If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were

$46,000

the balance of the sales returns and allowances account is subtracted from the balance of the AR account in the assets section of the balance sheet

false

to indicate that the column totals of the sales journal have been posted a check mark is entered under the column total

false

when a business makes a sale on a bank credit card the business is responsible for collecting from the customer

false

in a firm that uses special journals the acceptance of a return of merchandise from a credit customer is recorded in the: a) cash receipt journal b) sales journal c) cash payment journal d) general journal

general journal

which statement is incorrect? a) use of sales journal eliminates repetition in posting individual entries to AR in the general ledger b) journal that is used to record only one type of transaction is called a special journal c) sales slip is source document for sales on credit transactions d) if firm must collect sales tax on retail transactions, the sales journal should have a Sales Tax Payable Debit column

if firm must collect sales tax on retail transactions, the sales journal should have a Sales Tax Payable Debit column

**sales tax payable is classified as a(n) ___ account

liability

**the stock of goods kept on hand to sell to consumers is called:

merchandise inventory

**A(n) ___ business sells goods that it purchases in finished form for resale

merchandising

in a firm that uses special journals a sale of merchandise on credit is recorded in the : a) cash pyt journal b) cash receipts journal c) sales journal d) purchases journal

sales journal

if a firm doesn't have a sales returns and allowance journal, the entries for these transactions are made in:

the general journal

a wholesale business does not need a sales tax payable account

true

for a retailer bank credit card sales are like cash sales

true

in a small business the customer accounts usually are kept in alphabetical order

true