1. In a merchandising operation, the Sales account should include:
| | | a) | only credit sales of merchandise. | |
| | | b) | only cash sales of merchandise. | |
| | | c) | both cash and credit sales of merchandise. | |
| | | d) | all merchandise sales and sales of any other assets. | |
2. Rainbow Computers sold merchandise for cash. The proper journal entry to reflect this sale would be:
| | | a) | Debit Sales, and Credit Cash | |
| | | b) | Debit Cash, and Credit Accounts Receivable. | |
| | | c) | Debit Accounts Receivable, and Credit Sales. | |
| | | d) | Debit Cash, and Credit Sales. | |
3. Wilshire Equipment Company sold merchandise on credit. No discounts were offered. The proper journal entry to record this sale would be:
| | | a) | Wilshire Equipment Company sold merchandise on credit. No discounts were offered. The proper journal entry to record this sale would be: | |
| | | b) | Debit Cash, and Credit Accounts Receivable. | |
| | | c) | Debit Accounts Receivable, and Credit Sales. | |
| | | d) | Debit Accounts Receivable, and Credit Purchases (or Inventory). | |
4. If a seller of merchandise accepts merchandise returned by a credit customer, the seller will typically issue:
5. Which of the following statements is false?
| | | a) | List price minus invoice price is equal to the amount of the trade discount. | |
| | | b) | List price minus invoice price is equal to the amount of the trade discount. | |
| | | c) | Trade discounts are not entered in the accounting records. | |
| | | d) | Trade discounts are the same thing as cash discounts. | |
6. Which of the following statements is false?
a) Cash discounts are a convenient means of reducing list prices to invoice prices.
b) Cash discounts are used to encourage customers to make prompt payments.
c) For a seller, cash discount and sales discount are synonymous terms.
d) Cash discounts may be offered in conjunction with trade discounts.
7. On April 1, a $5,000 merchandise purchase was recorded under the gross method. The purchase was made on account and subject to credit terms of 2/10, n/30. The journal entry to record payment on April 15 would include:
| | | a) | a debit to Accounts Payable for $4,900. | |
| | | b) | a credit to Cash for $5,000. | |
| | | c) | a debit to Purchase Discounts Lost for $100. | |
| | |
8. On April 1, a $5,000 merchandise purchase was recorded under the net method. The purchase was made on account and subject to credit terms of 2/10, n/30. The journal entry to record payment on April 15 would include:
| | | a) | On April 1, a $5,000 merchandise purchase was recorded under the net method. The purchase was made on account and subject to credit terms of 2/10, n/30. The journal entry to record payment on April 15 would include: | |
| | | b) | a credit to Cash for $5,000. | |
| | | c) | a debit to Purchase Discounts Lost for $100. | |
| | |
9. Butler used a periodic inventory system. Merchandise was purchased on account for $2,000. The transaction was F.O.B. shipping point. Freight of $100 was originally paid by the seller. Butler's journal entry to reflect this purchase includes debits to:
| | |
| | | b) | Accounts Payable for $2,100. | |
| | |
| | |
