Deck 10: Accounting for Sales and Cash Receipts

Question 1

To verify that the sum of the accounts receivable ledger balances equals the Accounts Receivable balance, a schedule of accounts receivable is prepared.

Answer 1

True

Question 2

A retail business allows customers to enter the store, select the merchandise they want, and bring it to a sales clerk.

Answer 2

True

Question 3

If any merchandise has been returned, the sales discount is calculated on the net sales amount.

Answer 3

True

Question 4

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Net sales less sales returns and allowances and sales discounts equal gross sales.

Question 5

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A credit memo states the amount of a sales allowance or return.

Question 6

After all posting to the general ledger is completed, the accounts receivable, sales tax payable, and sales accounts in the general ledger are up to date.

Question 7

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Sales Returns and Allowances is debited for the selling price, including sales tax, of any merchandise returned by customers.

Question 8

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
To encourage customers who purchase merchandise on account to pay promptly, a cash discount is usually offered.

Question 9

Reductions in the price of merchandise granted by the seller because of defects or other problems with the merchandise are called merchandise sales.

Question 10

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
The accounts receivable ledger is simply a detailed listing of the same information that is summarized in Accounts Receivable in the general ledger.

Question 11

After the posting of the accounts receivable ledger and the general ledger is completed, the total of the accounts receivable ledger balances should equal the Accounts Receivable balance in the general ledger.

Question 12

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Selling goods on account is not common practice at the retail level of the distribution process.

Question 13

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Merchandise returned by the customer for a refund is called a sales return.

Question 14

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
If the amount of sales returns and allowances is large in proportion to gross sales, a weakness in the merchandising operations is indicated and the trouble should be determined and corrected.

Question 15

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A sales ticket is a document created as evidence of a sale in a retail business.

Question 16

Merchandise returned by a customer for a refund is called a sales discount.

Question 17

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
The sales account is credited for the selling price of merchandise sold during the period.

Question 18

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
The amounts for sales returns and allowances, sales discounts, and net sales added together equal gross sales.

Question 19

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
When a business uses a subsidiary accounts receivable ledger, there is no need to keep an accounts receivable account in the general ledger.

Question 20

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A common approach to keeping a record of each customer's account receivable is to use a subsidiary accounts receivable ledger.

Question 21

Sales made on account normally lead to cash receipts.

Question 22

If the seller permits merchandise to be returned or an allowance to be made, it is customary for the seller to issue a(n)

A) debit memorandum.
B) return memorandum.
C) credit memorandum.
D) allowance memorandum.

Question 23

To verify that the sum of the accounts receivable ledger balances equals the Accounts Receivable balance, a schedule of accounts payable is prepared.

Question 24

For the merchant, bank credit card sales are nothing like cash sales.

Question 25

A credit memorandum for $156 (sale price of merchandise $150; sales tax of $6) was issued to a customer for goods returned that had been purchased on account. To enter this transaction properly,

A) Sales would be debited for $6.
B) Sales would be debited for $150.
C) Sales would be debited for $156.
D) Sales would not be debited.

Question 26

A schedule of accounts receivable is prepared to

A) verify that the sum of the accounts receivable ledger balances equals the Accounts Receivable balance.
B) send to all customers at the end of the month.
C) prove that the general ledger and accounts receivable ledger were posted at the same time.
D) keep track of all the company's customers.

Question 27

Copies of a sales invoice are used to do all of the following EXCEPT

A) ship the merchandise.
B) bill the customer.
C) record the sale.
D) record the receipt of merchandise.

Question 28

Sales Tax Payable is a liability account.

Question 29

A customer returns merchandise that was delivered in poor condition and that does not meet specification. The account that the seller would debit for the amount of the return is

A) Sales Returns and Allowances.
B) Purchase Returns and Allowances.
C) Sales.
D) Purchases.

Question 30

Which of the following accounts is NOT used to account for merchandise sales transactions?

A) Sales
B) Sales Tax Payable
C) Sales Returns and Allowances
D) Accounts Payable

Question 31

Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $5.40. The sales account should be credited for

A) $84.60.
B) $90.00.
C) $95.40.
D) $93.60.

Question 32

If the schedule of accounts receivable total and the Accounts Receivable balance total do not agree, a correcting entry is made to balance the two totals.

Question 33

The sales tax payable account is a revenue account that is credited for the amount of tax imposed on sales.

Question 34

A business that purchases clothing, furniture, computers, or other products to sell to other businesses is a

A) retail business.
B) not-for-profit business.
C) wholesale business.
D) service business

Question 35

After posting is completed in the accounts receivable ledger and the general ledger, the total of the accounts receivable ledger balances should equal the

A) accounts payable account balance.
B) accounts receivable account balance.
C) cash account balance.
D) net income amount.

Question 36

The account in which the revenue earned from the sale of merchandise is entered is

A) Capital.
B) Sales.
C) Cash.
D) Inventory.

Question 37

The sales account is a revenue account.

Question 38

While sales returns and allowances can be debited directly to the sales account, it is better to debit a separate sales returns and allowances account.

Question 39

To a seller, cash discounts are considered the same as sales discounts.

Question 40

A summary accounts receivable account is called a(n)

A) controlling account.
B) balance account.
C) master account.
D) lead account.

Question 41

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
Merchandise returned by a customer for a refund.

Question 42

During the month of September, the following transactions occurred. The applicable sales tax rate is 6%. Enter the transactions in the general journal. ​

Question 43

To enter a cash sale, the journal entry includes

A) debiting Sales, debiting Sales Tax Payable, and crediting Cash.
B) debiting Sales Tax Payable, debiting Cash, and crediting Sales.
C) debiting Sales, debiting Cash, and crediting Sales Tax Payable.
D) debiting Cash, crediting Sales, and crediting Sales Tax Payable.

Question 44

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A transfer of merchandise from one business or individual to another in exchange for cash or a promise to pay cash.

Question 45

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A document issued when credit is given for merchandise returned or for an allowance.

Question 46

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A summary account maintained in the general ledger for a subsidiary ledger (for example, the accounts receivable ledger).

Question 47

A common approach to keeping a record of each customer's accounts receivable is to use a

A) sales journal.
B) subsidiary accounts receivable ledger.
C) controlling account.
D) general journal.

Question 48

Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $6.40. The amount that should be added to Accounts Receivable would be

A) $6.40.
B) $94.60.
C) $83.60.
D) $96.40.

Question 49

From the following data, compute net sales.

Question 50

Merchandise returned by the customer for a refund is called a

A) sales return.
B) sales allowance.
C) credit memo.
D) debit memo.

Question 51

Total sales less the sales price of any goods returned by customers, less any reduction in price given to customers, less cash discounts allowed by the seller, is called

A) cost of goods sold.
B) gross margin.
C) net sales.
D) gross profit.

Question 52

For the merchant, bank credit card sales are treated in a manner similar to

A) sales on account.
B) cash sales.
C) installment sales.
D) layaway sales.

Question 53

From the accounts receivable ledger, prepare a schedule of accounts receivable for Robinson's Auto Supply Center as of May 31, 20--.

Question 54

The source document of a sales transaction is called a

A) sales ticket.
B) sales return.
C) purchase order.
D) purchase receipt.

Question 55

From the accounts receivable ledger, prepare a schedule of accounts receivable for Jenn's Country Store as of March 31, 20--. ​ ​ ​ ​ ​

Question 56

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
The seller's term for cash discounts.

Question 57

A credit memorandum for $156 (sales price of merchandise, $150; sales tax $6) was issued to a customer for goods returned that had been purchased on account. To enter this transaction properly,

A) Accounts Receivable would be credited for $6.
B) Accounts Receivable would be credited for $150.
C) Accounts Receivable would be credited for $156.
D) Accounts Receivable would not be credited.

Question 58

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
Discounts to encourage prompt payment by customers who buy merchandise on account.

Question 59

The account that would be credited for the amount of tax collected and paid on sales would be

A) Sales.
B) Sales Tax Payable.
C) Cash.
D) Accounts Payable.

Question 60

A list showing the amount due from each customer as of a specified date is known as a

A) trial balance.
B) schedule of accounts payable.
C) schedule of accounts receivable.
D) work sheet.

Question 61

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A document that is generated to bill the customer who made the purchase.

Question 62

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
Reductions in the price of merchandise granted by the seller because of defects or other problems with the merchandise.

Question 63

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
Purchases merchandise such as clothing, furniture, or computers, and sells that merchandise to its customers.

Question 64

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A document created as evidence of a sale in a retail business.

Question 65

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
An alphabetical or numerical listing of customer accounts and balances, usually prepared at the end of the month.

Question 66

Match the terms with the definitions.a.accounts receivable ledger
b.cash discounts
c.controlling account
d.credit memo
e.merchandising business
f.sale
g.sales allowances
h.sales discounts
i.sales invoice
j.sales return
k.sales ticket
l.schedule of accounts receivable
A separate ledger containing an individual account receivable for each customer, kept in either alphabetical or numerical order.