Accounting Exam 4
The accounts receivable ledger is simply a detailed listing of the same information that is summarized in Accounts Receivable in the general ledger.
True
The first document created in the purchasing process normally is the purchase requisition.
True
The sales account is a revenue account.
True
The supplier or vendor is the person or firm from whom the merchandise or other property is ordered.
True
To a seller, cash discounts are considered the same as sales discounts.
True
To verify that the sum of the accounts receivable ledger balances equals the Accounts Receivable balance, a schedule of accounts receivable is prepared.
True
Trade discounts represent a reduction in the price of the merchandise and should not be entered in the accounts of either the seller or the buyer.
True
While sales returns and allowances can be debited directly to the sales account, it is better to debit a separate sales returns and allowances account.
True
A written order by a buyer for merchandise or other property specified in a purchase requisition is known as a
purchase order
The account to which transportation charges on incoming merchandise are generally entered is a. Freight-Out. b. Freight-In. c. FOB-In. d. Delivery-In.
b. Freight-In
Copies of a sales invoice are used to do all of the following EXCEPT a. record the sale. b. bill the customer. c. ship the merchandise. d. record the receipt of merchandise.
D. record the receipt of merchandise
If the schedule of accounts receivable total and the Accounts Receivable balance total do not agree, a correcting entry is made to balance the two totals.
False
Merchandise inventory at the beginning of the period minus purchases plus merchandise inventory at the end of the period equals cost of goods sold for the period.
False
The first step in the purchasing process involves preparing a purchase order.
False
The purchases discounts account is debited for cash discounts to customers.
False
Discounts from quoted prices which are contingent on prompt payment of invoices, within a stated discount period, are called cash discounts.
True
If the terms of an invoice dated April 10 are 3/10, n/30, the invoice must be paid on or before April 20 in order to be entitled to a discount.
True
Purchases Returns and Allowances is a contra-purchases account.
True
Special discounts on list prices granted to different classes of customers are known as trade discounts.
True
A credit memo states the amount of a sales allowance or return.
True
Which of the following accounts is NOT used to account for merchandise sales transactions? a. Sales Tax Payable b. Sales Returns and Allowances c. Accounts Payable d. Sales
c. Accounts Payable
A written order by a buyer for merchandise or other property specified in a purchase requisition is known as a purchase invoice.
False
If the amount of sales returns and allowances is large in proportion to gross sales, a weakness in the merchandising operations is indicated and the trouble should be determined and corrected.
True
Major documents used in the purchasing process are the purchase requisition, purchase order, receiving report, and sales invoice.
False
Reductions in the price of merchandise granted by the seller because of defects or other problems with the merchandise are called merchandise sales.
False
Sales Returns and Allowances is debited for the selling price, including sales tax, of any merchandise returned by customers.
False
Selling goods on account is not common practice at the retail level of the distribution process.
False
The sales tax payable account is a revenue account that is credited for the amount of tax imposed on sales.
False
When a business uses a subsidiary accounts receivable ledger, there is no need to keep an accounts receivable account in the general ledger.
False
A trade discount is often offered by wholesalers.
True
An account number in the Posting Reference column of the general journal indicates that the account has been posted to the general ledger.
True
For merchandising businesses, the term "purchases" refers only to merchandise acquired for resale.
True
Merchandise returned by the customer for a refund is called a sales return.
True
Purchases Returns and Allowances is the contra-purchases account to which purchases returns and purchases allowances are credited.
True
Sales made on account normally lead to cash receipts.
True
The account in which the revenue earned from the sale of merchandise is entered is a. Sales. b. Inventory. c. Capital. d. Cash.
a. sales
To enter a cash sale, the journal entry includes
debiting Cash, crediting Sales, and crediting Sales Tax Payable.
The entry to record the purchase on account of merchandise for resale under the periodic inventory system includes
debiting purchases and crediting accounts payable
Special discounts from list prices, granted by manufacturers to different classes of customers, are known as
trade discounts
The account that would be credited for the amount of tax collected and paid on sales would be
Sales Tax Payable
The source document of a sales transaction is called a
Sales ticket
Assume the gross amount of an invoice is $100 and a discount of 20% is allowed. The net amount is
$80
Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $5.40. The sales account should be credited for
$90.00
The terms on an invoice are 4/15, n/30. This means that
a discount of 4% will be allowed if payment is made within 15 days from the date of the invoice.
Which of the following indicates that a shipment is free on board at the destination of the shipment and the seller will pay the transportation costs? a. FOB destination b. 4/10, EOM c. COD d. FOB shipping point
a. FOB destination
After posting is completed in the accounts receivable ledger and the general ledger, the total of the accounts receivable ledger balances should equal the a. accounts receivable account balance. b. net income amount. c. accounts payable account balance. d. cash account balance.
a. accounts receivable account balance
If the seller permits merchandise to be returned or an allowance to be made, it is customary for the seller to issue a(n)
Credit Memorandum
For the merchant, bank credit card sales are treated in a manner similar to
Cash sales
