1. Sales returns are debited directly to the Sales account so that the business can more readily keep track of this activity.

A) T

B) F

A $5,000 sales invoice is dated July 12 with credit terms of 2/20, n/60. The credit terms mean that if the buyer pays the amount due within 2 days, he/she will receive a 20% discount,; otherwise, the entire amount is due in 60 days.

A) T

B) F

3. Which of the following accounts from the general ledger is called a control account or controlling account?

Sales Discounts

Supplies

Sales Returns and Allowances

Sales

Accounts Receivable

4. If sales taxes are imposed on merchandise sold, both the Sales and the Sales Tax Payable accounts are credited when sales are made. The Sales Tax Payable account is credited because it is:

a liability account

a revenue account

an expense account

a contra-revenue account

a contra-asset account

5. Merchandise is sold on account for $100, and the sale is subject to a retail sales tax of $8.00. The journal entry to record a RETURN of half of the merchandise sold would include:

Debit to Accounts Receivable for $54

Debit to Accounts Receivable for $50

Debit to Sales for $50

Debit Sales Tax Payable for $4

6.

A credit memorandum for $156 (sales price of merchandise, $150; sales tax $6) was issued to a customer for goods returned that had been purchased on account. To enter this transaction properly, Accounts Receivable would be credited for

$6

$150

$156

$134

none of the above