Chapter 9. 9.1 What kinds of transactions are recorded in a purchases journal? A) Merchandise bought...

Chapter 9

9.1

What kinds of transactions are recorded in a purchases journal?

A) Merchandise bought on accountB) All cash paymentsC) Sale of merchandise on accountD) All cash received

A

For what are special amount columns in a journal used?

A) Frequently occuring transactionsB) Rarely occuring transactionsC) Special transactionsD) None of the above

A

Why are there two account titles in the amount column of the purchases journal?

A) All purchases on account involve a debit to Purchases and a credit to Accounts PayableB) All sales on account involve a debit to Purcahses and a credit to Accounts PayableC) All purchases on account involve a debit to Accounts Payable and a credit to PurchasesD) All sales on account involve a debit to Accounts Payable and a credit to Purchases

A

What is the advantage of having special amount columns in a journal?

A) It saves timeB) It eliminates the need for recording the account numberC) It enables the records to be more thoroughD) All of the above

A

What type of account is Purchase Account?

A) Cost accountB) Expense accountC) Asset accountD) Liability account

A

Which of the following statements is true regarding Purchases accounts?

A) Purchases is a temporary account because the purchase of merchandise always reduces capital.B) Purchases is a permanent account because the purchase of merchandise always reduces capital.C) Purchases is a temporary account because the purchase of merchandise always increases capital.D) Purchases is a permanent account because the purchase of merchandise always increases capital.

A

The company purchased merchandise on account from Crown Distributing, $2,039. Which transaction is correct?

A) Debit Purchases, Credit Accounts PayableB) Debit Accounts Payable, Credit PurchasesC) Debit Purchases, Debit Accounts PayableD) Credit Accounts Payable, Credit Purchases

A

The source document for purchase accounts are which of the following?

A) Purchase InvoiceB) Purchase ReceiptC) Purchase CheckD) Purchase Memorandum

A

9.2

Why would a vendor offer a cash discount to a customer?

A) To encourage early paymentB) To encourage payment with a credit cardC) To encourage repeat businessD) To offer a tax break

A

Which of the following are NOT recorded in the general amount columns of the cash payments journal?

A) Cash payment of expensesB) Cash payment for suppliesC) Cash payment for purchasesD) Cash payment on account

D

What is the difference between purcahsing merchandise and buying supplies?

A) Supplies are used in the business whereas the Purchase account is for merchandise intended to be soldB) Supplies are intended to be sold whereas merchandise purchased and recorded in the Purchase account are used in the businessC) Supplies are lower priced items whereas merchandise bought and recorded in the Purchase account are for items larger than $40D) None of the answers are correct

A

What is meant by terms of sale 2/10, n/30?

A) 2% discount if amount paid in full within 10 days, full amount due in 30.B) $2 off if amount paid in full within 10 days, no discount if paid within 30 days.C) $2-10 discount if amount paid within 30 days.D) 2% discount for every $10 purchased up to $30 of purchase amount

A

The company paid cash for advertising, $150. Which of the following transactions would be appropriate?

A) Debit Advertising Expense, Credit CashB) Debit Cash, Credit Advertising ExpenseC) Debit Advertising Expense, Credit Accounts PayableD) Debit Accounts Payable, Credit Cash

A

The company paid cash for office supplies, $94. Which of the following transactions would be correct?

A) Debit Office Supplies, Credit CashB) Debit Cash, Credit Office SuppliesC) Debit Account Payable, Credit CashD) Debit Purcahse Discount, Credit Cash

A

The company purchased merchandise for cash, $600. Which of the following transactions would be accurate?

A) Debit Purchases, Credit CashB) Debit Accounts Payable, Credit CashC) Debit Purchase Discount, Credit CashD) None of the answers are correct

A

The company paid cash on account to Gulf Craft Supply, $488.04, covering original charge of $498, less 2% discount of $9.96. Which of the following would be accurate?

A) Debit Account Payable, Credit Purchase Discount and CashB) Debit Account Payable and Purchase Discount, Credit CashC) Debit Supplies, Credit Purchase Discount and CashD) Debit Supplies and Purchase Discount, Credit Cash

A

What is the source document for a cash purchase?

A) CheckB) MemorandumC) ReceiptD) Invoice

A

9.3

When journalizing a cash payment to replenish petty cash, what is entered in the Account Title column of the cash payments journal?

A) Petty CashB) The various accounts which incurred chargesC) CashD) None of the answers are correct

B

What is the usual balance of the Cash Short and Over account and why?

A) Debit because petty cash is more likely to be shortB) Credit because petty cash is more likely to be shortC) Debit because petty cash is more likely to be overD) Credit because petty cash is more likely to be over

A

The company paid cash to replenish the Petty Cash Fund, $208.66; Office Supplies $32.33, Advertising $50, Miscellaneous $128.50, Cash Over $2.17

A) DEBIT Office Supplies, Advertising Expense, Misc. Expense, CREDIT Cash Short and Over, and CashB) DEBIT Supplies Expense, Advertising Expense, Misc. Expense, CREDIT Cash Short and Over, and CashC) DEBIT Supplies Expense, Advertising Expense, Misc. Expense, Cash Short and Over, CREDIT CashD) DEBIT Office Supplies, Advertising Expense, Misc. Expense, Cash Short and Over, CREDIT Cash

A

When is a journal page proved and ruled?

A) When the journal page is full and at the end of the monthB) Only when the journal page is fullC) Only at the end of the monthD) None of the answers are correct

A

What account title is used when proving and ruling a journal page?

A) Carried ForwardB) Brought ForwardC) TotalsD) Proving and Ruling

A

What is the account title when starting a new journal page?

A) Carried ForwardB) Brought Forward C) TotalsD) Balance

B

What account title is used when totaling, proving and ruling the cash payment journal?

A) Carried ForwardB) Brought ForwardC) TotalsD) None of the above

C

9.4

What journal is used to record transactions that cannot be recorded in special journals?

A) Cash Payment JournalB) Cash Receipt JournalC) Purchase JournalD) General Journal

D

Why is a memorandum used as a source document when supplies are bought on account?

A) Because the invoice for the supplies looks similar to a purcahse invoice so the memo ensures the Supplies account is debited rather than the Purchases accountB) Because this is the type of source document Office Supply stores use to track purchases by their customersC) Because the memorandum can more easily be attached to the check when payment is madeD) All of these answers are correct

A

Why are two account titles written for the credit amount when supplies are bought on account?

A) Because both the Accounts Payable and the vendor account are affected by the transactionB) Because the Accounts Payable account is affected by the transactionC) Because the vendor account is affected by the transactionD) None of the answers are correct

A

When is the equality of debits and credits proved for a general journal?

A) At the end of the monthB) At the end of the pageC) After each transactionD) At the end of the year

C

If purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account?

A) It allows a company to track amount of purchase returns and allowances to a specific fiscal periodB) It allows a company to track amount of purchase returns and allowances to multiple fiscal periodsC) It allows a company to contact people who have made recent purchase returns and allowancesD) None of the answers are correct

A

What is a primary difference between a purchases return and a purchases allowance?

A) Return is when a customer takes part or all of the merchandise back to the store and receives store credit whereas "allowance" refers to merchandise that is damaged but usable so the customer keeps the merchandise but pays less for itB) Allowance is when a customer takes part or all of the merchandise back to the store and receives store credit whereas "return" refers to merchandise that is damaged but usable so the customer keeps the merchandise but pays less for itC) Return is when the customer brings merchandise back to the store and exchanges it for the exact same item whereas "allowance" refers to when a customer brings merchandise back and exchanges it for any merchandise priced within $2 of the original priceD) Allowance is when the customer brings merchandise back to the store and exchanges it for the exact same item whereas "return" refers to whe a customer brings merchandise back and exchanges it for any merchandise priced within $2 of the original price

A

When is a debit memorandum a proper source document for a purchases return or allowance?

A) When the customer has a decrease in the amount they oweB) When the customer has an increase in the amount they oweC) When the customer's bill remains unchangedD) None of these are correct

A

The company bought store supplies on account from Gulf Craft Supply, $210. Which of the following would be the correct entry?

A) Debit Supplies - Store, Credit Accounts Payable and Gulf Craft SupplyB) Debit Accounts Payable and Gulf Craft Supply, Credit Supplies - StoreC) Debit Supplies - Store and Gulf Craft Supply, Credit Accounts PayableD) Debit Accounts Payable, Credit Supplies - Store and Gulf Craft Supply

A

The company returned merchandise to Crown Distributing, $252. Which of the following would be the correct entry?

A) Debit Accounts Payable and Crown Distributing, Credit Purchases Return and AllowancesB) Debit Purchases Return and Allowances, Credit Accounts Payable and Crown DistributingC) Debit Accounts Payable, Credit Crown Distributing and Purchases Returns and Allowances D) Debit Crown Distributing and Purchases Returns and Allowances, Credit Accounts Payable

A

Which of the following accurately describes the Purchases Returns and Allowances account?

A) It is a contra account to PurchasesB) It is a contra account to SalesC) It is a cost account to PurchasesD) It is an expense account

A

What is the normal balance of the Purchases Returns and Allowances

A) The same normal balance as the Purchases accountB) The opposite normal balance as the Purchases accountC) The same normal balance as the Sales accountD) The opposite normal balance as the Sales account

B