Ch. 10 Review
True
For weekly cash and credit card sales, the asset account Cash is debited for the total of sales and sales tax, but the revenue account Sales is credited only for the total of sales.
c. $324.00
If a customer buys $300.00 worth of merchandise and the sales tax is 8%, the total bill the customer must pay is ____.
b. sales tax amount collected is a liability
In a cash sales transaction with sales tax, the ____.
b. Objective Evidence
Using a cash register tape as a source document for weekly cash and credit card sales is an application of the accounting concept ____.
b. Objective Evidence
Using a sales invoice as a source document for recording a sale on account is an application of the accounting concept ____.
False
Very few states in the United States require collecting a tax on sales of merchandise to customers.
False
When cash is received on account, Cash is increased and Accounts Receivable is increased.
d. accounts receivable account decreases
When cash is received on account, the balance of the ____.
b. the accounts receivable account balance is increased
When merchandise is sold on account and sales tax is also collected, ____.
True
The same accounting procedures are used for all sales tax rates.
True
The source document for a cash sale is a cash register tape.
True
The source document for receiving cash on account is a receipt.
a. Accounts Receivable
The total amount due from all charge customers is summarized in a general ledger account titled ____.
False
A cash sale is a sale in which a credit card is used for the total amount of the sale at the time of the transaction.
True
A computer used to collect, store, and report all the information of a sales transaction is called a point-of-sale terminal.
False
A credit card sale is a sale in which cash is received for the total amount of the sale at the time of the transaction.
True
A customer who uses a credit card promises to pay the bank that issued the credit card at a later date.
a. credit memorandum
A form prepared by the vendor showing the amount deducted for returns and allowances is called a ____.
True
A person or business to whom merchandise or services are sold is a customer.
b. cash sale
A sale in which cash is received for the total amount of the sale at the time of the transaction is a ____.
True
A sale of merchandise increases the revenue of a business.
True
A sale of merchandise may be for cash or on account.
b. increases the amount to be collected later from a customer
A sale on account transaction ____.
True
A sales invoice is also referred to as a sales ticket or a sales slip.
False
A sales journal is used to record both cash sales and sales on account.
c. a cash receipts journal
A special journal used to record only cash receipt transactions is ____.
True
A special journal used to record only cash receipts transactions is a cash receipts journal.
d. none of the above
A special journal used to record only sales on account is ____.
True
Accounts Receivable is an asset account with a normal debit balance.
a. at the time of the sale
An increase in revenue resulting from a sale on account should be recorded ____.
False
An invoice used as a source document for recording a sale on account is a purchase invoice.
False
At the end of the week, all credit card slips are gathered together, sorted by issuing bank, and mailed individually to each of the banks to collect payment.
True
Businesses must file reports with the proper government unit and pay the amount of sales tax collected.
True
Charge customer accounts are summarized in a general ledger account titled Accounts Receivable.
False
Credit allowed a customer for the sales price of returned merchandise is called a sales discount.
True
Double lines are ruled to show that totals have been verified as correct.
True
Equality of debits and credits in a special journal is proved at the end of each month.
True
Every business collecting a sales tax needs accurate records of the amount of total sales and total sales tax collected.
True
Purchases and sales of merchandise are the two major activities of a merchandising business.
c. Realization of Revenue
Recording revenue from transactions at the time goods or services are sold is an application of the accounting concept ____.
True
Sales for cash and credit cards are recorded as a single cash sales transaction.
d. all of these
Sales invoices should be ____.
True
Sales tax is a tax on sale of merchandise or services.
True
Sales tax rates are usually stated as a percentage of sales.
True
The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made.
False
The account Sales Tax Payable is increased by a debit and decreased by a credit.
c. a liability
The amount of sales tax a business collects is ____.
False
The amount of sales tax collected is an asset of the business until paid to the state government.
c. separate liability account
The amount of sales tax collected is recorded in a ____.
True
The amount of sales tax collected is recorded in a separate liability account titled Sales Tax Payable.
b. times the sales tax rate
The amount of sales tax on a sale is calculated as price of goods ____.
True
The bank that issues the credit card bills the customer and collects the amount owed.
False
The increase in revenue from a sale should be recorded at the time actual payment is received.
a. debit Cash; credit Sales; credit Sales Tax Payable
The journal entry for a cash and credit card sales transaction is ____.
a. debit Cash; credit Accounts Receivable
The journal entry for a cash receipt on account is ____.
False
The liability account Sales Tax Payable has a normal debit balance.
False
The report that summarizes the cash and credit card sales of a point-of-sale terminal is called a batch report.
True
The revenue account Sales has a normal credit balance.
True
The sales discount is calculated by multiplying the sales invoice amount by the sales discount rate.
True
The sales invoice from a seller is considered by the buyer to be a purchase invoice.