Name:
Class:
Date:
Indicate whether the statement is true or false.
1. A merchandising business places Purchases in the Operating Expenses section of the income statement.
a.
True
b.
False
2. The contra account Purchases Discount has a normal debit balance.
a.
True
b.
False
3. The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, Accounts
Payable.
a.
True
b.
False
4. The terms of sale 1/10, n/30 means that 1/10 or 10% of the invoice amount may be deducted if paid within 30 days.
a.
True
b.
False
5. The periodic inventory method does not require records of the quantity and cost of individual goods.
a.
True
b.
False
6. The total of a schedule of accounts payable less purchases discounts taken during the month will equal the total of
Accounts Payable.
a.
True
b.
False
7. The petty cash account Cash Short and Over is a temporary account.
a.
True
b.
False
8. A corporation exists independent of its owners.
a.
True
b.
False
9. A corporation can own property, incur liabilities, and enter into contracts in its own name.
a.
True
b.
False
10. A transaction to record merchandise purchased with a trade discount would include a debit to Merchandise Discount.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
Name:
Class:
Date:
b.
cash discount
11. Since contra accounts are offsets to their related accounts, contra account normal balances are
a.
debits.
b.
credits.
c.
opposite the normal balances of their related accounts.
d.
the same as the normal balances of their related accounts.
12. A periodic inventory conducted by counting, weighing, or measuring items of merchandise on hand is called a(n)
a.
perpetual inventory.
b.
inventory certification.
c.
audit verification.
d.
physical inventory.
13. Supplies bought for use in a business are recorded in the
a.
Supplies Expense account.
b.
Supplies account.
c.
Purchases account.
d.
Cash account.
14. To replenish a $300.00 petty cash fund, if the petty cash custodian had receipts totaling $224.00 and cash of $74.00 in
the petty cash box, one part of the journal entry is a
a.
debit to Cash Short and Over for $2.00.
b.
credit to Cash for $224.00.
c.
debit to Petty Cash for $224.00.
d.
credit to Cash Short and Over for $2.00.
15. An employee working with an account can trace a transaction back to the correct journal by using information in the
a.
Post. Ref. column.
b.
Item column.
c.
Purch. No. column.
d.
Vendor column.
16. A purchase of merchandise for cash would be posted
a.
individually to Purchases and individually to Accounts Payable.
b.
individually to Purchases.
c.
as part of a column total to Purchases.
d.
as part of column totals to Purchases and Accounts Payable.
17. The Purchases account is classified as a(n)
a.
expense account.
b.
asset account.
c.
liability account.
d.
cost of goods sold account.
18. Merchandise with a list price of $1,500.00 is purchased on account for $900.00 on August 1. Terms of sale are 2/10,
n/30. Payment is made on August 17. The amount paid should be
a.
$1,500.00.
b.
$900.00.
c.
$600.00.
d.
$882.00.
Directions: Select the one term that best fits each definition. Print the letter identifying your choice on the line to the left
of the statement.
a.
articles of incorporation
Name:
Class:
Date:
c.
contra account
d.
controlling account
e.
corporation
f.
credit limit
g.
general amount column
h.
list price
i.
periodic inventory
j.
perpetual inventory
k.
purchase order
l.
retail merchandising business
m.
requisition
n.
schedule of accounts payable
o.
share of stock
p.
special journal
q.
stockholder
r.
trade discount
s.
terms of sale
t.
wholesale merchandising business
19. A merchandising business that sells to those who use or consume the goods.
20. A business that buys and resells merchandise primarily to other merchandising businesses.
21. Each unit of ownership in a corporation.
22. An organization with the legal rights of a person which many persons or other corporations may own.
23. The owner of one or more shares of stock.
24. A legal document that identifies basic characteristics of a corporation.
25. An account in a general ledger that summarizes all accounts in a subsidiary ledger.
26. The retail price listed in a catalog or on an Internet site.
27. A reduction in the list price granted to a merchandising business.
28. An agreement between a buyer and a seller about payment for merchandise.
29. A merchandise inventory evaluated at the end of a fiscal period.
30. An account that reduces a related account on a financial statement.
31. A form requesting the purchase of merchandise.
32. An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item
of merchandise.
Name:
Class:
Date:
33. A form requesting that a vendor sell merchandise to a business.
34. A journal used to record only one kind of transaction.
35. A deduction that a vendor allows on an invoice amount to encourage prompt payment.
36. A journal amount column that is not headed with an account title.
37. The maximum outstanding balance allowed to a customer by a vendor.
38. A listing of vendor accounts, account balances, and the total amount due to all vendors.
Name:
Class:
Date:
Name:
Class:
Date: