Question 1

If an invoice states 5/15,n/60,the 15 refers to the:

Accepted Answer

The numbers in the invoice statement "5/15,n/60" represent the terms of the payment agreement. The "15" refers to the number of days in the discount period, during which the buyer can take a 5% discount off the total amount due if they pay the invoice in full. The "60" refers to the number of days in which the invoice must be paid in full. Therefore, the correct answer is B - days in the discount period.

Question 2

Caesar Company returned $750 of goods it had purchased from another company.The original invoice was for $4,200,3/10,n/30.What is the discount if Caesar pays the balance within the discount period?

Accepted Answer

The original invoice was $4,200, and $750 worth of goods were returned, leaving a balance of $3,450. The discount is 3% of the remaining balance if paid within the discount period. 3% of $3,450 is $103.50.

Question 3

When merchandise is purchased on account under the perpetual inventory system,the journal entry is:

Accepted Answer

When merchandise is purchased on account under the perpetual inventory system, the inventory account is debited to record the increase in inventory, and the accounts payable account is credited to record the liability that is created by the purchase. Therefore, the correct journal entry is to debit Inventory and credit Accounts Payable.

Question 4

A discount offered as an inducement for prompt payment of an invoice is called a(n):

Accepted Answer

The answer of A discount offered as an inducement for...

Question 5

Hawk Company purchases goods for resale from Spirits,Inc.The amount of the purchase is $12,500 with terms of 3/10,n/30.Hawk later returns $500 of the goods.Under the perpetual inventory system,the journal entry to record the return is:

Accepted Answer

In a perpetual inventory system, returns are recorded by debiting Accounts Payable and crediting Inventory to reflect the decrease in inventory due to the return.

Question 6

A record to keep the amount owed to each supplier is called a(n):

Accepted Answer

A record to keep the amount owed to each supplier is called an Accounts Payable subsidiary ledger. This ledger is a detailed breakdown of the total Accounts Payable balance and allows the company to keep track of the amount owed to each individual supplier. The other choices (A, C, and D) are not related to the specific record keeping of supplier balances.

Question 7

Aspen,Inc.purchased merchandise from Crimson Corp.for cash.The journal entry for Aspen,Inc.under a perpetual inventory system will be:

Accepted Answer

In a perpetual inventory system, when merchandise is purchased for cash, the Inventory account is debited to increase it, and the Cash account is credited to reflect the cash outflow.

Question 8

The time period within which an invoice may be paid early to receive a discount is called the:

Accepted Answer

The time period within which an invoice may be paid early to receive a discount is called the discount period. This is a common practice in business where suppliers offer discounts to customers who pay their invoices early.

Question 9

If an invoice reads n/15,it means that:

Accepted Answer

"n/15" means that the net amount of the invoice is due within 15 days.

Question 10

Discounts allowed for customers who pay their invoices early:

Accepted Answer

Discounts allowed for customers who pay their invoices early will reduce the cost of the purchased inventory for the customer, as they will pay less than the original price. They are not called manufacturers' discounts or allowances.

Question 11

An invoice of $237.50 is dated April 2,terms 2/10,n/30.If the invoice is paid on April 9,the amount to be paid is:

Accepted Answer

The terms 2/10, n/30 mean that there is a 2% discount if the invoice is paid within 10 days, otherwise the full amount is due within 30 days. 
If the invoice is paid on April 9 (within the discount period), the discount is 2% of $237.50 which is $4.75. Therefore, the amount to be paid is $237.50 - $4.75 = $232.75.

Question 12

Which of the following credit terms allows a discount of 3% if payment is made within 15 days of the invoice;otherwise,the total amount of the invoice must be paid within 30 days from the date of the invoice?

Accepted Answer

The credit terms offered in option C, 3/15, n/30, allow a 3% discount if the payment is made within 15 days of the invoice but requires the full payment within 30 days of the invoice date. This credit term is commonly used in business transactions to incentivize prompt payment while still allowing a reasonable amount of time to pay the full amount. The other options given do not have the same payment conditions as described in the question.

Question 13

The discount period is determined by the:

Accepted Answer

The discount period is determined by the seller of the merchandise as it is a pre-determined incentive offered by the seller to encourage prompt payment by the buyer. It is usually stated on the invoice and varies based on the seller's policy.

Question 14

The amount of an invoice is $1000,with terms 2/10,n30.The amount to be paid within the discount period is:

Accepted Answer

The terms "2/10, n/30" mean that the buyer can either pay the full amount ($1,000) within 30 days, or take a 2% discount ($20) if paid within 10 days. 
To find the amount to be paid within the discount period, we need to subtract the discount from the invoice amount: 
$1,000 - $20 = $980. 
Therefore, the correct answer is B.

Question 15

Under the perpetual inventory system,the account to which purchased goods are recorded is:

Accepted Answer

Under the perpetual inventory system, purchased goods are recorded in the Inventory account as a debit, which increases the value of the inventory. The Purchases account is used to record the cost of goods purchased, but only as a temporary account to calculate the cost of goods sold at the end of the period. Cost of Goods Sold is debited only when the goods are sold and the expense is recognized.

Question 16

Under the perpetual inventory system,purchases are entered into the asset account,Inventory,at the:

Accepted Answer

Under the perpetual inventory system, purchases are recorded in the Inventory asset account at the time of purchase. This means that each time a purchase is made, the Inventory account is updated to reflect the new items that have been added to the inventory. This allows for real-time tracking of inventory levels and cost of goods sold.

Question 17

TLR Productions has received an invoice for $4500 with terms of 3/15,n/50.If TLR pays the invoice on the seventeenth day,the Cash account will be:

Accepted Answer

The invoice terms 3/15,n/50 mean a 3% discount is available if paid within 15 days. Since TLR pays on the 17th day, they do not qualify for the discount and must pay the full amount of $4,500. Therefore, the Cash account will be credited for $4,500.

Question 18

TNT Corporation pays an invoice for $350 in time to take a 3% discount.The journal entry to record the payment of this invoice is:

Accepted Answer

The invoice amount is $350, and a 3% discount on $350 is $10.50. The Accounts Payable is debited for the full invoice amount of $350, Cash is credited for the amount paid after the discount ($350 - $10.50 = $339.50), and Inventory is credited for the discount amount of $10.50.

Question 19

Under the perpetual inventory system,which of the following T-accounts correctly shows the cost flows through the Inventory account?

Accepted Answer

The answer of Under the perpetual inventory system,which of the...

Question 20

The inventory system that uses the merchandise inventory account as an asset account is called the:

Accepted Answer

The answer of The inventory system that uses the merchandise...

Quiz 4: Accounting for a Merchandising Business