Q1

The Purchases account in a general ledger:

a.appears on the income statement.

b.appears on the balance sheet.

c.has a normal credit balance.

d.is an asset account.

Q2

Which of the following is a difference between the periodic inventory system and the perpetual inventory system?

a.The Purchases account is used under the periodic inventory system but not under the perpetual inventory system.

b.The Purchases account is used under the perpetual inventory system but not under the periodic inventory system.

c.The Merchandise Inventory account is used under the perpetual inventory system but not under the periodic inventory system.

d.The Merchandise Inventory account is used under the periodic inventory system but not under the perpetual inventory system.

Q3

Which of the following is a feature of a purchases journal?

a.It is difficult to fill the Post. Ref. column in a purchases journal.

b.It is not suitable for big businesses.

c.It consumes more time to record a transaction in a purchases journal than in a general journal.

d.It is not used to record purchases of goods not intended for resale to customers.

Q4

A credit memorandum:

a.authorizes a business to extend a loan to a buyer of merchandise to be redeemed within one year.

b.authorizes a business to take a loan from a buyer to meet the increased working capital requirements.

c.is a written statement indicating a seller's willingness to increase the amount of a buyer's debt.

d.is a written statement indicating a seller's willingness to reduce the amount of a buyer's debt.

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