Computerized Accounting With
PEACHTREE COMPLETE ACCOUNTING 2012
CONTENT CHECK ANSWERS
Chapter 5
Multiple Choice
1.
2.
3.
4.
5.
B
C
B
D
B
Short Essay Response
1. Purchasing goods and services on account allows a business to expand operations and take
advantage of opportunities even though the necessary funds are unavailable. A disadvantage is that
the amount owed to vendors may become too high in relation to the firm’s resources and,
therefore, detrimentally affect future plans and decisions.
2. The accounts payable subsidiary ledger provides detailed information about all transactions with
vendors and shows the balances owed them. The total of these accounts will be reflected in the
accounts payable controlling account in the general ledger.
3. The Accounts Payable controlling account provides a link between the general ledger and the
accounts payable subsidiary ledger because its balance is equal to the total of all the balances of
the individual vendor accounts in the subsidiary ledger.
4. A business should monitor its accounts payable closely in order to:
• maintain a good credit reputation,
• take advantage of discounts when offered,
• and keep the total amount owed to vendors from becoming too high in relation to the firm’s
resources.
5. A purchase transaction can be edited after it has been posted by clicking List from the toolbar at
the top of the Purchases/Receive Inventory window, selecting the transaction from the Purchase
List window, clicking Open from the toolbar, and then making the necessary changes.
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