Chapter 9 Accounting True and False

A merchandising business places Purchases in the Operating Expenses section of the income statement.

False

A transaction to record merchandise purchased with a trade discount would include a debit to Merchandise Discount.

False

The contra account Purchases Discount has a normal debit balance.

False

The terms of sale of 1/10, n/30 means that 1/10, or 10%, of the invoice amount may be deducted if paid within 30 days.

False

The total of a schedule of accounts payable less purchases discounts taken during the month will equal the total of Accounts Payable.

False

A corporation can own property, incur liabilities, and enter into contracts in its own name.

True

A corporation exists independent of its owners.

True

The periodic inventory method does not require records of the quantity and cost of individual goods.

True

The petty cash account, Cash Short and Over, is a temporary account.

True

The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, Accounts Payable.

True