Question 1

The account Freight-In accumulates the shipping costs to the seller.

Accepted Answer

A) True 
 B)False

Question 2

Hardware Restoration had net purchases of $50,000. If Purchases Returns and Allowances are $10,000 and Purchases Discounts are $1,500, what are gross purchases?

Accepted Answer

A) $38,500 
B) $50,000 
C) $61,500 
D) $40,000 
A) $38,500 
B) $50,000 
C) $61,500 
D) $40,000

Question 3

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 4

The entry to record a purchase of $5,000 on account, terms of 2/10, n/30, would include a:

Accepted Answer

A) debit to Purchases Discount for $100. 
B) credit to Accounts Payable for $5,000. 
C) debit to Accounts Payable for $5,000. 
D) credit to Cash for $5,000. 
A) debit to Purchases Discount for $100. 
B) credit to Accounts Payable for $5,000. 
C) debit to Accounts Payable for $5,000. 
D) credit to Cash for $5,000.

Question 5

Purchases discounts:

Accepted Answer

A) decrease net income. 
B) increase net income. 
C) have no effect on net income. 
D) Not enough information provided. 
A) decrease net income. 
B) increase net income. 
C) have no effect on net income. 
D) Not enough information provided.

Question 6

Heidi's Accessories bought 50 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the purchase would include:

Accepted Answer

A) a debit to Accounts Payable for $530. 
B) a debit to Accounts Payable for $500. 
C) a debit to Purchases for $530. 
D) a debit to Purchases for $500. 
A) a debit to Accounts Payable for $530. 
B) a debit to Accounts Payable for $500. 
C) a debit to Purchases for $530. 
D) a debit to Purchases for $500.

Question 7

Journalize the following transactions. All purchases are on account and subject to terms of 2/10, n/30. The periodic inventory method is used.
  
-Journalize the Nov. 5 transaction.

Accepted Answer

The answer of Journalize the following transactions. All purchases are...

Question 8

The Accounts Receivable and Accounts Payable are both controlling accounts.

Accepted Answer

A) True 
 B)False

Question 9

The Schedule of Accounts Payable is listed alphabetically.

Accepted Answer

A) True 
 B)False

Question 10

Using the perpetual inventory system, the purchase of merchandise on account would include a:

Accepted Answer

A) debit to Merchandise Inventory and a credit to Accounts Payable. 
B) debit to Accounts Payable and a credit to Merchandise Inventory. 
C) debit to Accounts Receivable and a credit to Sales. 
D) debit to Sales and a credit to Accounts Receivable. 
A) debit to Merchandise Inventory and a credit to Accounts Payable. 
B) debit to Accounts Payable and a credit to Merchandise Inventory. 
C) debit to Accounts Receivable and a credit to Sales. 
D) debit to Sales and a credit to Accounts Receivable.

Question 11

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 $6,000 from the Shelby Manufacturing Co. on account with credit terms 2/10, n/30. Transportation terms F.O.B destination.

Accepted Answer

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

Question 12

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

Accepted Answer

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

Question 13

The Purchases Discount account normally has a debit balance and is a contra-cost account.

Accepted Answer

A) True 
 B)False

Question 14

On September 6, Mark purchased merchandise for his electric store. The invoice was for $35,000 plus freight of $750, terms 2/15, n/30. The freight was included on the invoice. On September 10, Mark returned merchandise for $5,000 credit. On September 19, Mark paid the amount owed. Fill in the blanks below.
a)The credit to Accounts Payable on September 6 is ________.
b)The debit to Freight-In on September 6 is ________.
c)The debit to Accounts Payable on September 10 is ________.
d)The credit to Purchases Discount on September 19 is ________.
e)The credit to Cash on September 19 is ________.

Accepted Answer

a)$35,750

Question 15

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

Accepted Answer

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

Question 16

A purchase discount was recorded as a credit to the Purchases account and a debit to Accounts Payable. This error will cause:

Accepted Answer

A) net income to be overstated. 
B) net income to be understated. 
C) net income to not be affected. 
D) total assets to be overstated. 
A) net income to be overstated. 
B) net income to be understated. 
C) net income to not be affected. 
D) total assets to be overstated.

Question 17

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 18

Office Supplies (not used for resale)bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Purchase Returns and Allowances. This error will cause:

Accepted Answer

A) net income to be overstated. 
B) net income to be understated. 
C) net income to not be affected. 
D) total assets to be understated. 
A) net income to be overstated. 
B) net income to be understated. 
C) net income to not be affected. 
D) total assets to be understated.

Question 19

Journalize the following transactions. All purchases are on account and subject to terms of 2/10, n/30. The periodic inventory method is used.
  
-Journalize the Nov. 23 transaction.

Accepted Answer

The answer of Journalize the following transactions. All purchases are...

Question 20

If merchandise was bought for Cash, the same entry would be made on the company's books regardless of the type of inventory method is used.

Accepted Answer

A) True 
 B)False

Exam 10: Purchases and Cash Payments

The account Freight-In accumulates the shipping costs to the seller.

Hardware Restoration had net purchases of $50,000. If Purchases Returns and Allowances are $10,000 and Purchases Discounts are $1,500, what are gross purchases?

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:

The entry to record a purchase of $5,000 on account, terms of 2/10, n/30, would include a:

Purchases discounts:

Heidi's Accessories bought 50 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the purchase would include:

Journalize the following transactions. All purchases are on account and subject to terms of 2/10, n/30. The periodic inventory method is used. -Journalize the Nov. 5 transaction.

The Accounts Receivable and Accounts Payable are both controlling accounts.

The Schedule of Accounts Payable is listed alphabetically.

Using the perpetual inventory system, the purchase of merchandise on account would include a:

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

The Purchases Discount account normally has a debit balance and is a contra-cost account.

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

A purchase discount was recorded as a credit to the Purchases account and a debit to Accounts Payable. This error will cause:

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:

Office Supplies (not used for resale)bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Purchase Returns and Allowances. This error will cause:

Journalize the following transactions. All purchases are on account and subject to terms of 2/10, n/30. The periodic inventory method is used. -Journalize the Nov. 23 transaction.

If merchandise was bought for Cash, the same entry would be made on the company's books regardless of the type of inventory method is used.

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