Question 1

A debit memorandum decreases which account on the seller's books?

Accepted Answer

A)  Accounts Payable 
B)  Merchandise Inventory 
C)  Sales Returns and Allowances 
D)  Accounts Receivable 
A)  Accounts Payable 
B)  Merchandise Inventory 
C)  Sales Returns and Allowances 
D)  Accounts Receivable

Question 2

Returned merchandise for credit on account. The perpetual inventory system is in use. This will be recorded with:

Accepted Answer

A)  a debit to a liability and a credit to an expense. 
B)  a debit to an asset and a credit to an expense. 
C)  a debit to a liability and a credit to an asset. 
D)  a debit to an expense and a credit to a liability. 
A)  a debit to a liability and a credit to an expense. 
B)  a debit to an asset and a credit to an expense. 
C)  a debit to a liability and a credit to an asset. 
D)  a debit to an expense and a credit to a liability.

Question 3

The Bixby Co. had the following transactions involving the purchase of merchandise. Prepare the necessary general journal entries. Any applicable freight costs are prepaid by the seller. The perpetual inventory method is in use.  
-Prepare the necessary general journal entry for June 16. Purchased merchandise having a price of $9,000 from the Ajax Supply House on account with credit terms 2/10, n/30. Transportation terms F.O.B shipping point. The freight costs were $175.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________

Accepted Answer

The answer of The Bixby Co. had the following transactions...

Question 4

Discounts on purchases are not taken on the purchased merchandise plus freight.

Accepted Answer

A) True 
 B)False

Question 5

The entry to record a payment on a $660 account within the 4% discount period would include a:

Accepted Answer

A)  debit to Accounts Payable for $634. 
B)  debit to Accounts Payable for $660. 
C)  debit to Purchases for $634. 
D)  debit to Cash for $660. 
A)  debit to Accounts Payable for $634. 
B)  debit to Accounts Payable for $660. 
C)  debit to Purchases for $634. 
D)  debit to Cash for $660.

Question 6

Purchase discounts are given to the buyer from the supplier for motivation to increase quantity purchased.

Accepted Answer

A) True 
 B)False

Question 7

Merchandise Inventory is what type of account?

Accepted Answer

A)  Liability 
B)  Asset 
C)  Equity 
D)  Contra-asset 
A)  Liability 
B)  Asset 
C)  Equity 
D)  Contra-asset

Question 8

Purchased office supplies on account. This will be recorded with:

Accepted Answer

A)  a debit to Accounts Payable and a credit to Supplies. 
B)  a debit to Supplies and a credit to Supplies Expense. 
C)  a debit to Supplies and a credit to Accounts Payable. 
D)  a debit to Supplies and a credit to Purchases. 
A)  a debit to Accounts Payable and a credit to Supplies. 
B)  a debit to Supplies and a credit to Supplies Expense. 
C)  a debit to Supplies and a credit to Accounts Payable. 
D)  a debit to Supplies and a credit to Purchases.

Question 9

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, and in Column 3 the financial statement that the account in which the account balance is reported.

Accepted Answer

The answer of For each of the following, identify in...

Question 10

F.O.B. shipping point means:

Accepted Answer

A)  the buyer pays for the freight. 
B)  the seller pays for the freight. 
C)  the title passes at time of shipment. 
D)  Both A and C are correct. 
A)  the buyer pays for the freight. 
B)  the seller pays for the freight. 
C)  the title passes at time of shipment. 
D)  Both A and C are correct.

Question 11

To prove the subsidiary ledger agrees with the Accounts Payable controlling account balance, complete a:

Accepted Answer

A)  trial balance. 
B)  schedule of accounts payable. 
C)  purchase order. 
D)  schedule of accounts receivable. 
A)  trial balance. 
B)  schedule of accounts payable. 
C)  purchase order. 
D)  schedule of accounts receivable.

Question 12

Which account is the controlling account for the amounts owed to individual creditors?

Accepted Answer

A)  Accounts Payable in the general ledger 
B)  Purchases in the general ledger 
C)  Accounts Receivable in the subsidiary ledger 
D)  Accounts Payable in the subsidiary ledger 
A)  Accounts Payable in the general ledger 
B)  Purchases in the general ledger 
C)  Accounts Receivable in the subsidiary ledger 
D)  Accounts Payable in the subsidiary ledger

Question 13

The Bixby Co. had the following transactions involving the purchase of merchandise. Prepare the necessary general journal entries. Any applicable freight costs are prepaid by the seller. The perpetual inventory method is in use.  
-Prepare the necessary general journal entry for June 28.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________

Accepted Answer

The answer of The Bixby Co. had the following transactions...

Question 14

When the terms are F.O.B. shipping point, the buyer is responsible for the cost of shipping from the seller's shipping point to the purchaser's location, but the title does not pass until it is delivered.

Accepted Answer

A) True 
 B)False

Question 15

The entry to record returned merchandise to Vine Company is:

Accepted Answer

A)  debit Merchandise Inventory; credit Accounts Receivable in the general ledger. 
B)  debit Accounts Payable; credit Supplies. 
C)  debit Accounts Payable/Vine Company in the accounts payable subsidiary ledger and debit Accounts Payable in the general ledger; credit Merchandise Inventory. 
D)  debit Merchandise Inventory; credit Accounts Payable. 
A)  debit Merchandise Inventory; credit Accounts Receivable in the general ledger. 
B)  debit Accounts Payable; credit Supplies. 
C)  debit Accounts Payable/Vine Company in the accounts payable subsidiary ledger and debit Accounts Payable in the general ledger; credit Merchandise Inventory. 
D)  debit Merchandise Inventory; credit Accounts Payable.

Question 16

Returned merchandise under the periodic inventory method. This will be recorded with:

Accepted Answer

A)  a debit to Accounts Payable and a credit to Purchases Returns and Allowances. 
B)  a debit to Merchandise Inventory and a credit to Cash. 
C)  a credit to Accounts Payable and a debit to Merchandise Inventory. 
D)  a debit to Accounts Payable and a credit to Merchandise Inventory. 
A)  a debit to Accounts Payable and a credit to Purchases Returns and Allowances. 
B)  a debit to Merchandise Inventory and a credit to Cash. 
C)  a credit to Accounts Payable and a debit to Merchandise Inventory. 
D)  a debit to Accounts Payable and a credit to Merchandise Inventory.

Question 17

Returned merchandise paid for within the discount period for a Cash refund. This will be recorded with:

Accepted Answer

A)  a credit to a liability. 
B)  a credit to both an asset and liability. 
C)  a debit to a liability. 
D)  a debit to an asset. 
A)  a credit to a liability. 
B)  a credit to both an asset and liability. 
C)  a debit to a liability. 
D)  a debit to an asset.

Question 18

A receiving report is used to notify the company of the quantity and condition of the goods received.

Accepted Answer

A) True 
 B)False

Question 19

On June 15, Melo Park purchased merchandise for the race track. The invoice was for $6,000, terms 2/10, n/30. On June 20, Paradise Park returned $300 of merchandise for credit. On June 25, it paid the amount owed. Fill in the blanks below.
a) The debit to Merchandise Inventory on June 15 is ________.
b) The credit to Accounts Payable on June 15 is ________.
c) The credit to Merchandise Inventory on June 20 is ________.
d) The credit to Cash on June 25 is ________.
e) The credit to Merchandise Inventory on June 25 is ________.

Accepted Answer

a) $6,000

Question 20

The recording of the cost of freight-in under the perpetual inventory system would include a:

Accepted Answer

A)  debit to Freight-In. 
B)  credit to Merchandise Inventory. 
C)  debit to Merchandise Inventory. 
D)  credit to Freight-Out. 
A)  debit to Freight-In. 
B)  credit to Merchandise Inventory. 
C)  debit to Merchandise Inventory. 
D)  credit to Freight-Out.

Exam 10: Purchases and Cash Payments

A debit memorandum decreases which account on the seller's books?

Returned merchandise for credit on account. The perpetual inventory system is in use. This will be recorded with:

Discounts on purchases are not taken on the purchased merchandise plus freight.

The entry to record a payment on a $660 account within the 4% discount period would include a:

Purchase discounts are given to the buyer from the supplier for motivation to increase quantity purchased.

Merchandise Inventory is what type of account?

Purchased office supplies on account. This will be recorded with:

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, and in Column 3 the financial statement that the account in which the account balance is reported.

F.O.B. shipping point means:

To prove the subsidiary ledger agrees with the Accounts Payable controlling account balance, complete a:

Which account is the controlling account for the amounts owed to individual creditors?

When the terms are F.O.B. shipping point, the buyer is responsible for the cost of shipping from the seller's shipping point to the purchaser's location, but the title does not pass until it is delivered.

The entry to record returned merchandise to Vine Company is:

Returned merchandise under the periodic inventory method. This will be recorded with:

Returned merchandise paid for within the discount period for a Cash refund. This will be recorded with:

A receiving report is used to notify the company of the quantity and condition of the goods received.

The recording of the cost of freight-in under the perpetual inventory system would include a:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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