Deck 10: Accounting for Sales and Cash Receipts

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

Selling goods on account is not common practice at the retail level of the distribution process.

Question 6

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

Question 7

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

Question 8

The accounts receivable ledger is simply a detailed listing of the same information that is summarized in Accounts Receivable in the general ledger.

Question 9

If the amount of sales returns and allowances is small in proportion to gross sales, a weakness in the merchandising operations is indicated and the trouble should be determined and corrected.

Question 10

Merchandise returned by the customer for a refund is called a sales return.

Question 11

A sales ticket is a document created as evidence of a sale in a retail business.

Question 12

A credit memo states the amount of a sales allowance or return.

Question 13

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

Question 14

When a business uses a subsidiary accounts receivable ledger, there is no need to keep an accounts receivable account in the general ledger.

Question 15

The sales account is debited for the selling price of merchandise sold during the period.

Question 16

The amounts for sales returns and allowances, sales discounts, and net sales added together equal gross sales.

Question 17

Sales Returns and Allowances is credited for the selling price, including sales tax, of any merchandise returned by customers.

Question 18

Gross sales less sales returns and allowances and sales discounts equal net sales.

Question 19

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 20

To encourage customers who purchase merchandise on account to pay promptly, a cash discount is usually offered.

Question 21

Sales Tax Payable is an asset account.

Question 22

Sales made on account normally lead to cash receipts.

Question 23

The sales account is a revenue account.

Question 24

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

Question 25

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 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

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 28

A summary accounts receivable account is called a(n)

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

Question 29

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

Question 30

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

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

Question 31

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

Question 32

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 33

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 34

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

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

Question 35

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 36

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

Question 37

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 38

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 39

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 40

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 41

The source document of a sales transaction is called a

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

Question 42

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 43

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 44

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 45

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 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 document that is generated to bill the customer who made the purchase.

Question 47

A schedule of accounts receivable is normally prepared

A) following each transaction.
B) daily.
C) weekly.
D) monthly.

Question 48

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 49

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 50

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 51

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 52

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 53

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 54

A schedule of accounts receivable is prepared from the

A) list of customer accounts in the accounts receivable ledger.
B) general journal.
C) sales journal.
D) general ledger.

Question 55

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 56

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 57

Merchandise returned by the customer for a refund is called a

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

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
An alphabetical or numerical listing of customer accounts and balances, usually prepared at the end of the month.

Question 59

Merchandise is sold on account for $90, and the sale is subject to a retail sales tax of $5.40. The amount that should be added to Accounts Receivable would be

A) $5.40.
B) $94.60.
C) $93.60.
D) $95.40.

Question 60

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

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
A document created as evidence of a sale in a retail business.

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 separate ledger containing an individual account receivable for each customer, kept in either alphabetical or numerical order.