Chapter 9
9.1
What kinds of transactions are
recorded in a purchases journal?
A) Merchandise bought on account
B) All cash payments
C) Sale of merchandise on account
D) All cash received
A
For what are special amount columns
in a journal used?
A) Frequently occuring transactions
B) Rarely occuring transactions
C) Special transactions
D) 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 Payable
B) All sales on account involve a debit to
Purcahses and a credit to Accounts Payable
C) All purchases on account involve a debit to
Accounts Payable and a credit to Purchases
D) 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 time
B) It eliminates the need for recording the
account number
C) It enables the records to be more thorough
D) All of the above
A
What type of account is Purchase
Account?
A) Cost account
B) Expense account
C) Asset account
D) 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 Payable
B) Debit Accounts Payable, Credit Purchases
C) Debit Purchases, Debit Accounts Payable
D) Credit Accounts Payable, Credit Purchases
A
The source document for purchase
accounts are which of the following?
A) Purchase Invoice
B) Purchase Receipt
C) Purchase Check
D) Purchase Memorandum
A
9.2
Why would a vendor offer a cash
discount to a customer?
A) To encourage early payment
B) To encourage payment with a credit card
C) To encourage repeat business
D) 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 expenses
B) Cash payment for supplies
C) Cash payment for purchases
D) 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
sold
B) Supplies are intended to be sold whereas
merchandise purchased and recorded in the
Purchase account are used in the business
C) Supplies are lower priced items whereas
merchandise bought and recorded in the Purchase
account are for items larger than $40
D) 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 Cash
B) Debit Cash, Credit Advertising Expense
C) Debit Advertising Expense, Credit Accounts
Payable
D) 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 Cash
B) Debit Cash, Credit Office Supplies
C) Debit Account Payable, Credit Cash
D) 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 Cash
B) Debit Accounts Payable, Credit Cash
C) Debit Purchase Discount, Credit Cash
D) 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
Cash
B) Debit Account Payable and Purchase Discount, Credit
Cash
C) Debit Supplies, Credit Purchase Discount and Cash
D) Debit Supplies and Purchase Discount, Credit Cash
A
What is the source document for a
cash purchase?
A) Check
B) Memorandum
C) Receipt
D) 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 Cash
B) The various accounts which incurred charges
C) Cash
D) 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
short
B) Credit because petty cash is more likely to be
short
C) Debit because petty cash is more likely to be
over
D) 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 Cash
B) DEBIT Supplies Expense, Advertising Expense, Misc.
Expense, CREDIT Cash Short and Over, and Cash
C) DEBIT Supplies Expense, Advertising Expense, Misc.
Expense, Cash Short and Over, CREDIT Cash
D) 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 month
B) Only when the journal page is full
C) Only at the end of the month
D) None of the answers are correct
A
What account title is used when
proving and ruling a journal page?
A) Carried Forward
B) Brought Forward
C) Totals
D) Proving and Ruling
A
What is the account title when starting
a new journal page?
A) Carried Forward
B) Brought Forward
C) Totals
D) Balance
B
What account title is used when
totaling, proving and ruling the cash
payment journal?
A) Carried Forward
B) Brought Forward
C) Totals
D) None of the above
C
9.4
What journal is used to record
transactions that cannot be recorded
in special journals?
A) Cash Payment Journal
B) Cash Receipt Journal
C) Purchase Journal
D) 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 account
B) Because this is the type of source document Office
Supply stores use to track purchases by their customers
C) Because the memorandum can more easily be
attached to the check when payment is made
D) 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 transaction
B) Because the Accounts Payable account is
affected by the transaction
C) Because the vendor account is affected by the
transaction
D) 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 month
B) At the end of the page
C) After each transaction
D) 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 period
B) It allows a company to track amount of purchase
returns and allowances to multiple fiscal periods
C) It allows a company to contact people who have
made recent purchase returns and allowances
D) 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 it
B) 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 it
C) 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 price
D) 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 owe
B) When the customer has an increase in the
amount they owe
C) When the customer's bill remains unchanged
D) 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 Supply
B) Debit Accounts Payable and Gulf Craft Supply,
Credit Supplies - Store
C) Debit Supplies - Store and Gulf Craft Supply,
Credit Accounts Payable
D) 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 Allowances
B) Debit Purchases Return and Allowances, Credit
Accounts Payable and Crown Distributing
C) 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 Purchases
B) It is a contra account to Sales
C) It is a cost account to Purchases
D) 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
account
B) The opposite normal balance as the
Purchases account
C) The same normal balance as the Sales
account
D) The opposite normal balance as the Sales
account
B