Question 1

The Purchases Returns and Allowances account normally has a credit balance.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following transactions will cause one asset to be debited and another to be credited when the periodic inventory system is in use?

Accepted Answer

A) Purchased merchandise on account 
B) Purchased merchandise for cash. 
C) Purchased office supplies for cash 
D) Purchased office supplies on account 
A) Purchased merchandise on account 
B) Purchased merchandise for cash. 
C) Purchased office supplies for cash 
D) Purchased office supplies on account

Question 3

When merchandise is bought for resale,which of the following accounts would be decreased?

Accepted Answer

A) Store Equipment 
B) Purchases 
C) Cash 
D) Capital 
A) Store Equipment 
B) Purchases 
C) Cash 
D) Capital

Question 4

Net purchases are:

Accepted Answer

A) Purchases + Purchases Returns and Allowances. 
B) Purchases - Purchases Discount - Purchases Returns and Allowances. 
C) Purchases - Freight - Purchases Returns and Allowances. 
D) Purchases + Freight-in. 
A) Purchases + Purchases Returns and Allowances. 
B) Purchases - Purchases Discount - Purchases Returns and Allowances. 
C) Purchases - Freight - Purchases Returns and Allowances. 
D) Purchases + Freight-in.

Question 5

On November 30,Janoch's Dog Kennel purchased $600 of merchandise on account from the Ganster Company.The goods were shipped F.O.B.shipping point.The freight charge of $40 was paid by Ganster Company and added to the invoice.The amount to record in the Purchases account is:

Accepted Answer

A) $600. 
B) $640. 
C) $560. 
D) $550. 
A) $600. 
B) $640. 
C) $560. 
D) $550.

Question 6

If a debit memorandum is issued,the buyer will reduce their accounts receivable.

Accepted Answer

A) True 
 B)False

Question 7

The normal balance for Purchases Returns and Allowances is:

Accepted Answer

A) a debit. 
B) a credit. 
C) It does not have a normal balance. 
D) zero. 
A) a debit. 
B) a credit. 
C) It does not have a normal balance. 
D) zero.

Question 8

Compare and contrast the controlling account Accounts Payable to the accounts payable subsidiary ledger.Discuss why the balance of the controlling account,Accounts Payable,does not equal the sum of the accounts payable ledger during the month.

Accepted Answer

The controlling account, Accounts Payabl

Question 9

Determine the amount to be paid within the discount period for purchase with an invoice price of $5,000 and credit terms of 2/10,n/30 when $500 has already been returned for credit.
$ ________

Accepted Answer

The answer of Determine the amount to be paid within...

Question 10

An entry to record the payment to a vendor was correctly recorded and posted to the general ledger but was not posted to the subsidiary ledger.This error will cause:

Accepted Answer

A) net income to be overstated. 
B) net income to be understated. 
C) the accounts payable control account to not agree with the subsidiary ledger. 
D) the accounts receivable control account to not agree with the subsidiary ledger. 
A) net income to be overstated. 
B) net income to be understated. 
C) the accounts payable control account to not agree with the subsidiary ledger. 
D) the accounts receivable control account to not agree with the subsidiary ledger.

Question 11

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.
-$\begin{array} { | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 \
\hline \begin{array} { l } 
\text { Merchandise } \
\text { Inventory }
\end{array} & & & \
\hline
\end{array}$

Accepted Answer

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

Question 12

Returned merchandise paid for within the discount period for cash.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 asset. 
B) a debit to an asset and a credit to an asset. 
C) a debit to an expense and a credit to a liability. 
D) a debit to an expense and a credit to an asset. 
A) a debit to a liability and a credit to an asset. 
B) a debit to an asset and a credit to an asset. 
C) a debit to an expense and a credit to a liability. 
D) a debit to an expense and a credit to an asset.

Question 13

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.
-$\begin{array} { | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 \
\hline \text { Purchases Returns } & & & \
\text { and Allowances } & & & \
\hline
\end{array}$

Accepted Answer

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

Question 14

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.
June 16 Purchased merchandise having a price of $\$ 6,000$ from the Shelby Manufacturing Co. on account with credit terms $10 , \mathrm { n } / 30$. Transportation terms F.O.B destination.
June 16 Purchased merchandise having a price of $\$ 9,000$ from the Ajax Supply House on account with credit terms $2 / 10 , \mathrm { n } / 30$. Transportation terms F.O.B shipping point. The freight costs were $\$ 175$.
June 17 Received the goods from Shelby.
June 17 Received the goods from Ajax.
June 20 Returned for credit merchandise with an invoice price of $\$ 800$ to Ajax.
June 25 Paid Shelby the amount owed.
June 28 Paid Ajax the amount owed.
June 30 Returned for cash, merchandise with an invoice price of $\$ 400$ to Shelby.
-Prepare the necessary general journal entry for June 28.

Accepted Answer

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

Question 15

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.
June 16 Purchased merchandise having a price of $\$ 6,000$ from the Shelby Manufacturing Co. on account with credit terms $10 , \mathrm { n } / 30$. Transportation terms F.O.B destination.
June 16 Purchased merchandise having a price of $\$ 9,000$ from the Ajax Supply House on account with credit terms $2 / 10 , \mathrm { n } / 30$. Transportation terms F.O.B shipping point. The freight costs were $\$ 175$.
June 17 Received the goods from Shelby.
June 17 Received the goods from Ajax.
June 20 Returned for credit merchandise with an invoice price of $\$ 800$ to Ajax.
June 25 Paid Shelby the amount owed.
June 28 Paid Ajax the amount owed.
June 30 Returned for cash, merchandise with an invoice price of $\$ 400$ to Shelby.
-Prepare the necessary general journal entry for June 17,Received the goods from Ajax.

Accepted Answer

No entry needed; the

Question 16

The account used in perpetual inventory to record the cost of inventory used to make the sale is:

Accepted Answer

A) Purchases. 
B) Purchases Returns and Allowances. 
C) Purchases Discounts. 
D) Cost of Goods Sold. 
A) Purchases. 
B) Purchases Returns and Allowances. 
C) Purchases Discounts. 
D) Cost of Goods Sold.

Question 17

Purchase discounts are given to the buyer from the supplier for early payment on account.

Accepted Answer

A) True 
 B)False

Question 18

Purchases Discounts are not taken on freight costs.

Accepted Answer

A) True 
 B)False

Question 19

Jackie's Online Service on April 30 has the following account balances: $\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 25,000 \
\hline \text { Sales Returns and Allowances } & 5,000 \
\hline \text { Purchases } & 14,000 \
\hline \text { Freight-In } & 1,000 \
\hline \text { Purchases Returns and Allow. } & 2,000 \
\hline \text { Purchases Discounts } & 1,400 \
\hline
\end{array}$ Net purchases for the period are:

Accepted Answer

A) $10,600. 
B) $9,600. 
C) $12,600. 
D) $14,000. 
A) $10,600. 
B) $9,600. 
C) $12,600. 
D) $14,000.

Question 20

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.

Exam 10: Purchases and Cash Payments

The Purchases Returns and Allowances account normally has a credit balance.

Which of the following transactions will cause one asset to be debited and another to be credited when the periodic inventory system is in use?

When merchandise is bought for resale,which of the following accounts would be decreased?

Net purchases are:

On November 30,Janoch's Dog Kennel purchased $600 of merchandise on account from the Ganster Company.The goods were shipped F.O.B.shipping point.The freight charge of $40 was paid by Ganster Company and added to the invoice.The amount to record in the Purchases account is:

If a debit memorandum is issued,the buyer will reduce their accounts receivable.

The normal balance for Purchases Returns and Allowances is:

Compare and contrast the controlling account Accounts Payable to the accounts payable subsidiary ledger.Discuss why the balance of the controlling account,Accounts Payable,does not equal the sum of the accounts payable ledger during the month.

Determine the amount to be paid within the discount period for purchase with an invoice price of $5,000 and credit terms of 2/10,n/30 when $500 has already been returned for credit. $ ________

An entry to record the payment to a vendor was correctly recorded and posted to the general ledger but was not posted to the subsidiary ledger.This error will cause:

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. - Column 1 Column 2 Column 3 Merchandise Inventory

Returned merchandise paid for within the discount period for cash.The perpetual inventory system is in use.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. - Column 1 Column 2 Column 3 Purchases Returns and Allowances

The account used in perpetual inventory to record the cost of inventory used to make the sale is:

Purchase discounts are given to the buyer from the supplier for early payment on account.

Purchases Discounts are not taken on freight costs.

Jackie's Online Service on April 30 has the following account balances: Sales \ 25,000 Sales Returns and Allowances 5,000 Purchases 14,000 Freight-In 1,000 Purchases Returns and Allow. 2,000 Purchases Discounts 1,400 Net purchases for the period are:

F.O.B.shipping point means:

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: The Conclusion of the Payroll Process

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, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters