Accounting Chapter 14

A ledger or book of accounts that is summarized in a controlling account in the general ledger is called a(n) ____.

Subsidiary Ledger

Bankcard sales are recorded like cash sales because a business expects to receive its cash within a few days of the deposit.

T

Cash discounts are offered by a business to encourage charge customers to pay promptly.

T

If John Smith's account was incorrectly credited instead of Tom Watkins's account in the AR Subsidiary Ledger, a correcting entry must be recorded in the general journal.

T

Sales taxes collected by a business represent a liability until they are paid.

T

The Sales Returns and Allowances account is important to a business because it shows the amount of credit granted to dissatisfied customers.

T

The balance side of any contra account is always on the side opposite the balance side of the account it decreases.

T

The revenue account for a merchandising business is usually called Sales.

T

When a diagonal line is placed in the Posting Reference column of the general journal, it indicates that the amount is posted twice—once to a controlling account and once to a subsidiary ledger account.

T

A business that sells to retailers is called a(n) ____.

Wholesaler

If the merchandise is purchased for $1,000 on August 1, with terms of sale 2/10, n/30, the amount due to the vendor on August 9 is??

980

A(n) ____ contains accounts for all charge customers.

AR/Subsidiary Ledger

A(n) ____ is issued by a bank and is honored by many businesses.

Bank card

A business that buys goods and then sells those goods to customers for a profit is called a(n) ____.

Merchandising Business

A(n) ____ refers to cash that is received by a business.

Cash Receipt

When a customer pays for merchandise in full at the time of purchase, the transaction is called a ____.

Cash Sale

When bankcard sales are entered in the general journal, what account is debited?

Cash in Bank

The customer to whom a sale on account is made is called a(n) ____.

Charge customer

The balance of a(n) ____ must agree with the balance of the accounts in its related subsidiary ledger.

Controlling Account

The decrease the Sales Returns and Allowances account, the accountant will debit or credit the account?

Credit

Charge customers often use a(n) ____ when they make a purchase on account.

Credit Card

A(n) ____ is a source document prepared by the seller to notify a charge customer that the customer's account will be decreased by the amount of a return or allowance.

Credit Memo

____ set out the time period for a customer to make full payment of an invoice.

Credit Terms

When you have a Cash Receipt on account, which accounts are debited and credited?

Debit: Cash in Bank Credit: AR

Credit memos result in credits to or increases in customer accounts.

F

In both manual and computerized accounting systems, charge customers accounts do not have account numbers.

F

The increase side of the account Sales Discounts is a credit.

F

The source documents for recording cash sale transactions and cash receipts from charge customers are the same.

F

When a retail merchandising business sells goods to a customer, the amount of the sold merchandise is credited to the Merchandise Inventory account.

F

____ refers to the items of merchandise a business has in stock.

Inventory

____ are the goods a business buys for resale to its customers.

Merchandise

A form that serves as a record of cash received from a charge customer is called a ____.

Receipt

A business that sells to the final user is known as a ____.

Retailer

A price reduction offered to a customer who keeps damaged or defective merchandise is a(n) ____.

Sales Allowance

A reduction in a sales invoice that is given to a customer for prompt payment is a ____.

Sales Discount

Full credit or a cash refund granted by a merchant to a customer for unsatisfactory merchandise is a(n) ____.

Sales Return

When a customer is given a price reduction on an item (for example, a damaged item), the bookkeeper will use which account?

Sales Return and allowance

A(n) ___ is a form that lists the details of a sale, the date of the sale, the name of the customer, and the description, quantity, and price of goods sold.

Sales Slip

A levy imposed by most states on the retail sales price of goods and services is a(n) ____.

Sales Tax

A(n) ____ occurs when a customer buys an item with a promise to pay for it later.

Sales on account