Question 1

An invoice of $237.50 dated April 2 is subject to credit terms of 2/10, n/30. The amount to be paid if the invoice is paid on or before April 12 is

Accepted Answer

A)  $4.75. 
B)  $23.75. 
C)  $232.75. 
D)  $237.50. 
A)  $4.75. 
B)  $23.75. 
C)  $232.75. 
D)  $237.50.

Question 2

The first step in the purchasing process involves preparing a purchase order.

Accepted Answer

A) True 
 B)False

Question 3

A record used to keep the amount owed to each supplier is called a(n)

Accepted Answer

A)  accounts receivable ledger. 
B)  accounts payable ledger. 
C)  transportation ledger. 
D)  general ledger for accounts payable. 
A)  accounts receivable ledger. 
B)  accounts payable ledger. 
C)  transportation ledger. 
D)  general ledger for accounts payable.

Question 4

If the merchandise received is damaged or unsatisfactory, an adjustment may be made that is referred to as an allowance.

Accepted Answer

A) True 
 B)False

Question 5

Record the following transactions as general journal entries. Use the gross-price method.

Accepted Answer

The answer of Record the following transactions as general journal...

Question 6

Purchases Returns and Allowances is the contra-purchases account to which purchases returns and purchases allowances are credited.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following indicates that the shipment is free on board at the final point of shipment and the seller must pay all transportation costs?

Accepted Answer

A)  COD 
B)  FOB shipping point 
C)  FOB destination 
D)  4/10, EOM 
A)  COD 
B)  FOB shipping point 
C)  FOB destination 
D)  4/10, EOM

Question 8

A discount offered as an inducement for prompt payment of an invoice is called a(n)

Accepted Answer

A)  trade discount. 
B)  invoice discount. 
C)  early discount. 
D)  cash discount. 
A)  trade discount. 
B)  invoice discount. 
C)  early discount. 
D)  cash discount.

Question 9

Match the terms with the definitions.
-Transportation charges are paid by the buyer.

Accepted Answer

A) accounts payable ledger 
B) cost of goods sold 
C) FOB destination 
D) FOB shipping point 
E) gross profit
F)purchase invoice
G)purchase order
H)purchase requisition
I)purchases
J)receiving report
K)schedule of accounts payable
L)trade discount 
A) accounts payable ledger 
B) cost of goods sold 
C) FOB destination 
D) FOB shipping point 
E) gross profit
F)purchase invoice
G)purchase order
H)purchase requisition
I)purchases
J)receiving report
K)schedule of accounts payable
L)trade discount

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

A trade discount is often offered by wholesalers.

Accepted Answer

A) True 
 B)False

Question 12

Merchandise inventory available at the beginning of the period plus cost of goods purchased minus merchandise inventory at the end of the period equals

Accepted Answer

A)  purchases. 
B)  cost of goods sold. 
C)  purchases returns and allowances. 
D)  net purchases. 
A)  purchases. 
B)  cost of goods sold. 
C)  purchases returns and allowances. 
D)  net purchases.

Question 13

(Appendix) A purchase was made for $200 on account with credit terms of 2/10, n/30. The purchase was recorded using the net-price method. If payment is made 25 days later, the entry to record the payment will be to

Accepted Answer

A)  debit Accounts Payable for $200 and credit Cash for $200. 
B)  debit Accounts Payable for $204, credit Purchases Discounts Lost for $4, and credit Cash for $200. 
C)  debit Accounts Payable for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200. 
D)  debit Purchases for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200. 
A)  debit Accounts Payable for $200 and credit Cash for $200. 
B)  debit Accounts Payable for $204, credit Purchases Discounts Lost for $4, and credit Cash for $200. 
C)  debit Accounts Payable for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200. 
D)  debit Purchases for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200.

Question 14

Which of the following credit terms allows a discount of 2% if payment is made within 10 days with the total amount of the invoice due within 60 days?

Accepted Answer

A)  2/10, n/30 
B)  2/10, EOM/60 
C)  10/2, n/60 
D)  2/10, n/60 
A)  2/10, n/30 
B)  2/10, EOM/60 
C)  10/2, n/60 
D)  2/10, n/60

Question 15

The first document created in the purchasing process normally is the purchase requisition.

Accepted Answer

A) True 
 B)False

Question 16

A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment is commonly referred to by the seller as a purchase invoice.

Accepted Answer

A) True 
 B)False

Question 17

If the terms specified on an invoice are 2/10, n/30, this means that a discount of 2% will be allowed if payment is made within 30 days from the date of the invoice.

Accepted Answer

A) True 
 B)False

Question 18

Freight-In is an adjunct-purchases account to which transportation charges on merchandise purchases are debited.

Accepted Answer

A) True 
 B)False

Question 19

The purchases discounts account is debited for cash discounts to customers.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following credit terms allows a discount of 3% if payment is made within 15 days from the date of the invoice; otherwise, the total amount of the invoice must be paid within 30 days from its date?

Accepted Answer

A)  3/15, EOM 
B)  3/EOM, n/30 
C)  3/15, n/30 
D)  15/3, n/30 
A)  3/15, EOM 
B)  3/EOM, n/30 
C)  3/15, n/30 
D)  15/3, n/30

Exam 11: Accounting for Purchases and Cash Payments

An invoice of $237.50 dated April 2 is subject to credit terms of 2/10, n/30. The amount to be paid if the invoice is paid on or before April 12 is

The first step in the purchasing process involves preparing a purchase order.

A record used to keep the amount owed to each supplier is called a(n)

If the merchandise received is damaged or unsatisfactory, an adjustment may be made that is referred to as an allowance.

Record the following transactions as general journal entries. Use the gross-price method.

Purchases Returns and Allowances is the contra-purchases account to which purchases returns and purchases allowances are credited.

Which of the following indicates that the shipment is free on board at the final point of shipment and the seller must pay all transportation costs?

A discount offered as an inducement for prompt payment of an invoice is called a(n)

Match the terms with the definitions. -Transportation charges are paid by the buyer.

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.

A trade discount is often offered by wholesalers.

Merchandise inventory available at the beginning of the period plus cost of goods purchased minus merchandise inventory at the end of the period equals

(Appendix) A purchase was made for $200 on account with credit terms of 2/10, n/30. The purchase was recorded using the net-price method. If payment is made 25 days later, the entry to record the payment will be to

Which of the following credit terms allows a discount of 2% if payment is made within 10 days with the total amount of the invoice due within 60 days?

The first document created in the purchasing process normally is the purchase requisition.

A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment is commonly referred to by the seller as a purchase invoice.

If the terms specified on an invoice are 2/10, n/30, this means that a discount of 2% will be allowed if payment is made within 30 days from the date of the invoice.

Freight-In is an adjunct-purchases account to which transportation charges on merchandise purchases are debited.

The purchases discounts account is debited for cash discounts to customers.

Which of the following credit terms allows a discount of 3% if payment is made within 15 days from the date of the invoice; otherwise, the total amount of the invoice must be paid within 30 days from its date?

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

Filters