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AT3- 2 10. When a customer returns merchandise purchased on credit, the customer should credit Accounts Payable. seller should credit Sales Returns and Allowances. customer should credit Accounts Receivable. none of the above. 9-.\" FT!\" Credit terms of 2/10, n/BD mean that a. a 10% cash discount may be taken if payment is made immediately; a 2% discount if paid within 30 days. b. a 2% cash discount may be taken if payment is made within 10 days of the invoice date; othenivise the full amount is due at the end of the month. c. an additional amount equal to 2% of the invoice price must be paid if payment is not received within 10 days; the account is overdue after 30 days. d. a 2% cash discount may be taken if payment is made within 10 days of the invoice date; otherwise the full amount is due within 30 days. A periodic inventory system allows for the determination of cost of goods sold after each sale. traditionally has been used with low unit-value items. requires that detailed inventory records be kept. requires the use of a cost of goods sold account. 9-.\" F7!\" In accordance with the revenue recognition principle, sales revenues are recorded when a. earned, which typically occurs when the goods are transferred from the seller to the buyer. b. cash is received from the customer for items already delivered. c. an order is received from a customer with delivery of the product expected to take place within the next 30 days. d. the accountant determines which period's income statement "needs" more revenue. Test Bank for Financial Accounting, Sixth Edition Expenses that relate to such activities as personnel management, accounting, and store security generally should appear in a multiple-step income statement in the a. Cost of Goods Sold section. b. Administrative Expenses section. c. Nonoperating section. d. Selling Expenses section. Which of the following accounts should appear in the Nonoperating section of a multiple-step income statement? a. Freight-out b. Sales Discounts c. Sales Returns and Allowances d. lnte rest Expense Freight terms of FOB shipping point mean that the a. buyer must bear the freight costs. seller must debit freight out. goods are placed free on board at the buyer's place of business. seller must bear the freight costs. eon With regard to accounting for a merchandising company versus a service enterprise, which of the following is false? a. Additional accounts and entries are typically required for a merchandising company. b. Both retail and wholesale enterprises generally use accounting techniques of a merchandising company. c. The process of measuring net income is conceptually different. d. There are just as many steps as in the accounting cycle for a merchandising company. With regard to the accounts used to record freight costs, a. Freight-out is added to Cost of Goods Sold. b. Freight-out's normal balance is a debit. c. Freight-out is recorded when freight terms are FOB shipping point. d. Freight-out is a contra account to Sales. The Sales Returns and Allowances account a. normally has a credit balance. should not be closed at the end of the period. is a contra account to Accounts Receivable. is used by a merchandising company, but not a service enterprise. 9.0.6
