Accounting Chapter 15
purchase discount
The buyer's cash discount for early payment of an invoice on account.
debit memorandum
The form a business uses to notify its suppliers (creditors) of a return or to request an allowance.
false
True/False A business must write a check to pay the bank for service charges and bankcard fees charged to its checking account.
false
True/False A cash discount is an advantage to the buyer but not to the seller.
false
True/False Invoices are placed in a tickler file according to their invoice numbers.
true
True/False One example of a good internal control procedure requires that all cash payments be authorized.
true
True/False Prepaid Insurance is classified as an asset account.
false
True/False Shipping charges are always paid by the seller.
true
True/False The Purchases account is a temporary account.
false
True/False The discount period is calculated from the day the invoice was received.
true
True/False The source document for recording the purchase of merchandise on account is an invoice.
true
True/False When a diagonal line is placed in the Posting Reference column, this indicates that two postings are to be made.
true
True/False Whether merchandise is purchased for cash or credit, the Purchases account is always debited.
packing slip
a form that lists the items included in the shipment
premium
the amount paid for insurance
purchase order
A written offer to a supplier to buy specified items
purchase requisition
A written request that a specified item or items be ordered
debit memo
A ______ ____ is used to notify suppliers of a purchase return or allowance.
Processing stamp/due date
A _____________ ________ indicates when an invoice is to be paid.
packing slip
A box of merchandise received by a business would include a ___________ ________.
invoice
A document prepared by the seller is a ______________.
bankcard fee
A fee charged for handling bankcard sales slips; usually based on the total amounts recorded on the sales slips processed.
contra
Purchases Discounts is a ________ account.
suppliers invoice
Purchases of merchandise on account are journalized when the ____________ ____________ is processed.
subsidiary
Purchases on account are posted to a general ledger account and a __________ ledger account.
purchasing process
Requesting needed items, ordering, verifying items received, and processing the supplier's invoice are steps in the ___________ ____________.
FOB shipping point
Shipping term specifying that the buyer pays the shipping charge from the supplier's shipping point.
purchases return
The return of merchandise bought on account to the supplier for full credit.
true
True/False A purchase order is prepared by the buyer and sent to the supplier as an offer to purchase merchandise or other assets.
true
True/False A tickler file contains folders for each day of the month so that invoices can be placed in the folders according to heir due dates.
true
True/False Accounts Payable is a controlling account and it is found in the general ledger.
false
True/False Bank charges and bankcard fees are paid by check.
false
True/False Creditor accounts in the accounts payable subsidiary ledger normally have debit balances.
false
True/False If the date of an invoice is October 1 and the terms are 2/10, n/30, a discount may be taken if the invoice is paid on or before October 31.
true
True/False If the invoice states FOB shipping point, it is the buyer's responsibility to pay the shipping charges from the seller's location.
true
True/False In a manual accounting system, the creditors' accounts in the accounts payable subsidiary ledger are listed in alphabetical order.
false
True/False The Purchases account is used to record the sale of merchandise on account.
true
True/False The annual premium paid for insurance coverage is debited to the asset account, Prepaid Insurance.
shipping point
When the buyer pays the shipping charges, the merchandise is sent FOB ___________ ______.
discount period
the period of time within which an invoice must be paid if a discount is to be taken.
invoice
A processing stamp is placed on the ______________.
Purchase returns and allowances
A return of merchandise to the seller is recorded in the ________ ________ ______ ___________.
accounts payable subsidiary ledger
A separate ledger that contains accounts for all creditors; it is summarized in the Accounts Payable controlling account in the general ledger.
processing stamp
A stamp placed on a creditor's invoice that outlines the steps to be followed in processing the invoice for payment.
ticker file
A file that contains a folder for each day of the month into which invoices are placed according to their due dates.
purchases allowance
A price reduction given when a business keeps unsatisfactory merchandise it has bought.
FOB destination
Shipping term specifying that the supplier pays the shipping cost to the buyer's destination.
credit
The Purchase Discounts account has a normal _______ balance.
purchases
The ___________ account is used to record all merchandise purchased by the business for resale.
Purchases account
The account used to record the cost of merchandise purchased during a period.
cost of merchandise
The actual cost to the business of the merchandise sold to customers.
due date
The date by which an invoice must be paid.
