Deck 10: Cash Receipts and Cash Payments

Question 1

Which of the following is not posted daily when using special journals?

A) A transaction involving a customer
B) A transaction entered into the Other Accounts column of a special journal
C) A transaction involving a creditor
D) A column total in a special journal
E) Individual numbers in columns and column totals in special journals are all posted daily.

Answer 1

D

Question 2

The amount of discount to be recorded if the invoice is paid within the discount period on a purchase of goods having a list price of $1,600, subject to a trade discount of 25 percent with terms 2/10, n/30, is

A) $450.
B) $30.
C) $21.
D) $29.40.
E) $24.

Answer 2

E

Question 3

When a general journal and four special journals are in use, the entries in the Cash account will generally be posted from

A) two special journals and the general journal.
B) only two of the four special journals.
C) all the books of original entry.
D) only three of the four special journals.
E) only the general journal.

Answer 3

B

Question 4

Column titles for a cash receipts journal may be

A) Cash Debit, Sales Discounts Debit, Sales Credit, Accounts Receivable Credit, and Other Accounts Debit.
B) Cash Debit, Sales Discounts Debit, Sales Credit, Accounts Receivable Credit, and Other Accounts Credit.
C) Cash Debit, Sales Discounts Credit, Sales Credit, Accounts Receivable Debit, and Other Accounts Credit.
D) Cash Debit, Sales Discounts Debit, Sales Debit, Accounts Receivable Credit, and Other Accounts Credit.
E) Cash Credit, Accounts Receivable Credit, and Other Accounts Debit.

Question 5

Barnes Company purchased merchandise on account, $3,500, with terms 3/10, n/30. The entry required of Barnes Company to record the transaction in the cash payments journal, assuming payment is not made within the discount period, is

A) debit Accounts Payable, $3,500; credit Sales Discounts, $105; credit Cash, $3,395.
B) debit Accounts Payable, $3,500; credit Cash, $3,500.
C) debit Accounts Payable, $3,395; credit Cash, $3,395.
D) debit Accounts Payable, $3,500; credit Purchases Discounts, $105; credit Cash, $3,395.
E) credit Accounts Payable, $3,500; credit Cash, $3,500.

Question 6

Which of the following means "do not post-the figures have already been posted separately" in a cash receipts journal?

A) An (X) under the total of the Other Accounts Credit Column
B) An (Y) under the total of the Sales Accounts Debit Column
C) An (Z) under the total of the Expense Accounts Credit Column
D) An (A) under the total of the Accounts Receivables Accounts Debit Column
E) An (B) under the total of the Wages Accounts Credit Column

Question 7

Carlyle Company sold goods for $425 plus a 7 percent sales tax to a customer using a bank credit card. The bank deducts a 3 percent discount. Carlyle Company debits Cash for

A) $441.11.
B) $412.25.
C) $454.75.
D) $437.75.
E) $468.50.

Question 8

A business sells merchandise, $500, on account with terms of 1/20, n/60. The customer pays within the discount period. The amount recorded in the Cash Debit column is:

A) $495.00.
B) $618.00.
C) $300.00.
D) $228.00.
E) $345.00.

Question 9

Which of the following is true of sales discounts?

A) It is shown as an addition to Other Income on the income statement.
B) It is shown on the balance sheet under owner's equity.
C) It is shown on the balance sheet under liability.
D) It is shown as a deduction from Sales on the income statement.
E) It is shown on the balance sheet under short-term assets.

Question 10

Bronze Company purchased merchandise on account, $2,000, with terms 2/10, n/30. The payment for purchases is made within the discount period. Which of the following journal entries records the transaction in the cash payments journal?

A) Debit to Accounts Payable for $1,950, credit to Sales Discounts for $30, credit to Cash for $1,920
B) Debit to Accounts Payable for $1,940, credit to Cash for $1,940
C) Debit to Accounts Payable for $2,000, credit to Cash for $2,000
D) Debit to Accounts Payable for $2,000, credit to Purchases Discounts for $40, credit to Cash for $1,960
E) Debit to Accounts Payable, $2,040; credit Cash $2,040

Question 11

The cash payments journal is used for transactions involving

A) credits to Cash, regardless of the offsetting debits.
B) credits to Cash but not affecting subsidiary ledgers.
C) a debit to Cash and credits to other accounts.
D) a debit to Cash and debits or credits to other balance sheet accounts.
E) a credit to Cash and a debit to income statement accounts.

Question 12

The Credit Card Expense column would most likely be found in

A) the purchases journal.
B) the cash payments journal.
C) the sales journal.
D) the cash receipts journal.
E) all the special journals.

Question 13

A business sells merchandise, $850, plus 4 percent sales tax, and the customer used a bank charge card. The discount charged by the bank is 3 percent of the total of sales plus sales tax. The amount recorded in the Sales Tax Payable Credit column of its cash receipt journal is:

A) $20.00.
B) $34.00.
C) $18.00.
D) $50.00.
E) $70.00.

Question 14

Accounts Payable would appear as a debit in

A) the cash payments journal.
B) the sales journal.
C) the purchases journal.
D) the cash receipts journal.
E) all the special journals.

Question 15

Which of the following accounts normally has a debit balance?

A) Sales
B) Sales Discounts
C) Sales Tax Payable
D) Sales and Sales Tax Payable
E) Sales Discounts and Sales Tax Payable

Question 16

Sales Discounts would appear as a Debit column in which special journal

A) purchases journal.
B) general journal.
C) sales journal.
D) cash payments journal.
E) cash receipts journal.

Question 17

Which of the following accounts normally has a credit balance?

A) Sales Discounts
B) Sales Returns and Allowances
C) Purchases Returns and Allowances
D) Purchases
E) Accounts Receivable

Question 18

The entry to purchase a one-year insurance policy for cash would be recorded in the cash payments journal in the

A) Cash Debit column and the Accounts Payable Debit column.
B) Other Accounts Debit column and the Cash Credit column.
C) Accounts Payable Debit column and the Cash Credit column.
D) Cash Debit column and the Other Accounts Credit column.
E) Accounts Payable Debit column and the Other Accounts Credit column.

Question 19

Individual amounts in the Accounts Receivable Credit column of a cash receipts journal are

A) posted monthly to the accounts receivable ledger.
B) posted monthly to the general ledger.
C) posted daily to the accounts receivable ledger.
D) posted daily to the general ledger.
E) not posted.

Question 20

Which of the following journals has end-of-the-month postings?

A) Cash payments journal
B) Purchases journal
C) Sales journal
D) Cash receipts journal
E) All special journals have end-of-the-month postings.

Question 21

On October 30, goods with a list price of $10,500 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Payment is received from the customer on November 5. The amount recorded in the Sales Credit column on October 30 is

A) $10,500.
B) $10,290.
C) $7,875.
D) $7,717.50.
E) $2,625.

Question 22

The reductions from the list prices that are not journalized are called:

A) business margins.
B) trade discounts.
C) freight commissions.
D) recoverable discounts.
E) bad debts.

Question 23

Tyler Corporation bought office supplies for $125 cash. In what journal would this transaction be recorded?

A) Purchase Journal
B) Sales Journal
C) Cash Receipt Journal
D) Cash Payment Journal

Question 24

Which of the following accounts are considered contra accounts?

A) Sales Discounts
B) Purchase Returns & Allowances
C) Sales Returns & Allowances
D) All of the above

Question 25

Which of the following is the correct classification of Sales Discount account?

A) Contra asset account
B) Contra revenue account
C) Contra expenses account
D) Contra drawings account

Question 26

Tyler Floor Company sold flooring for $1,275 cash. The sales tax for the customer using a bank credit card was 6%. Tyler Floor Company will debit Cash for what amount?

A) $1,351.50
B) $1,324.47
C) $1,198.58
D) $1,174.61

Question 27

Stryker Company issued a check for June rent in the amount of $650. In what journal would this transaction be recorded.

A) Sales Journal
B) Cash Payment Journal
C) Cash Receipt Journal
D) General Journal

Question 28

On October 30, goods with a list price of $9,200 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Payment is received from the customer on November 5. The amount of cash received on November 5 is

A) $6,160.
B) $8,770.
C) $6,762.
D) $6,036.
E) $6,900.

Question 29

The time the seller allows the buyer to make a full payment is the

A) Credit Discount
B) Payment Period
C) Credit Period
D) None of the above

Question 30

A cash discount of 1/15, n/30 included in the credit terms of a sale indicates that the buyer should make payment:

A) within 15 days to avail the discount of 1%.
B) after 30 days to avail the discount of 2%.
C) within 15 days to avail the discount of 2%.
D) after 30 days to avail the discount of 1%.

Question 31

What is the journal entry to record the receipt of payment on June 15th for the following: June 1st, merchandise sold on account in the amount of $525, credit terms 1/10, n/30.

A)
$\text { Accounts Receivable } \quad 525 \mathrm{DR}$
$\text { Cash } \quad 525 \mathrm{CR}$
B)
Cash $\quad\quad525 \mathrm { CR }$
Accounts Receivable $\quad525 \mathrm { CR }$
C)
$\begin{array} { l r r } \text { Accounts Receivable } & 519.75 \mathrm { DR } & \\\text { Sales Discount } & 5.25 \mathrm { DR } & \\\quad \text { Cash } & & 525 \mathrm { CR }\end{array}$
D)
$\begin{array} { l r r } \text { Cash } & 525 \mathrm { DR } & \\\text { Sales Discount } & & 5.25 \mathrm { CR } \\\quad \text { Accounts Receivable } & & 519.75 \mathrm { CR }\end{array}$

Question 32

What does the "2" in 2/10, n/30 mean?

A) The credit period
B) Discount taken if paid within 10 days
C) Discount taken if paid within 30 days
D) The due date

Question 33

On October 30, goods with a list price of $9,500 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Payment is received from the customer on November 5. The amount recorded in the Sales Discounts Debit column on November 5 is

A) $2,375.
B) $190.
C) $6,762.
D) $142.50.
E) $0.

Question 34

Sales Discounts and Sales Returns and Allowances have the following characteristics in common:

A) Contra-Asset, DR
B) Contra-Revenue, DR
C) Contra-Asset, CR
D) Contra-Revenue, CR

Question 35

What is the journal entry to record the receipt of payment on February 10th for the following: February 2nd, merchandise sold on account in the amount of $475. Credit terms 2/10, n/30.

A)
Cash $\quad\quad475 \mathrm { DR }$
Accounts Receivable $\quad475 \mathrm { CR }$
B)
$\text { Accounts Receivable } \quad 475 \mathrm{DR}$
$\text { Cash } \quad 475 \mathrm{CR}$
C)
$\begin{array} { l r r } \text { Cash } & 465.50 \mathrm { DR } & \\\text { Sales Discount } & 9.50 \mathrm { DR } & \\\quad \text { Accounts Receivable } & & 475 \mathrm { CR }\end{array}$
D)
$\begin{array} { c r } \text { Accounts Receivable } & 475 \mathrm { DR } \\\text { Cash } & 465.50 \mathrm { CR } \\\text { Sales Discount } & 9.5 \mathrm { CR }\end{array}$

Question 36

On October 30, goods with a list price of $9,200 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Payment is received from the customer on December 11. The amount of cash received on December 11 is

A) $6,160.
B) $8,770.
C) $2,640.
D) $6,036.
E) $6,900.

Question 37

The amount a customer can deduct if the bill is paid within a specific period of time is called a

A) Credit Period
B) Cash Discount
C) Credit Discount
D) Trade Discount

Question 38

Which of the following statements is NOT true?

A) Sales Discounts is a contra-revenue.
B) Freight costs are included when determining discounts.
C) Sales Returns & Allowances has a DR normal balance.
D) Purchase Discounts is a contra account.

Question 39

You will never find the following combination of accounts in a journal entry except

A) Accounts Receivable and Purchases.
B) Accounts Payable and Sales.
C) Sales Returns and Allowances and Accounts Payable.
D) Purchases Returns and Allowances and Accounts Payable.
E) Accounts Payable and Accounts Receivable.

Question 40

Most computer accounting software packages allow businesses to

A) Post cash receipts for sales
B) Apply Discounts
C) Both A & B
D) Neither A or B

Question 41

This account is used to represent the amount owed on a promissory note.

A) Accounts Payable
B) Notes Payable
C) Promissory Note
D) Cash Receipt Payable

Question 42

Credit card receipts, cash, checks, electronic funds transfers are all examples of source documents that would be recorded in the following journal:

A) Sales Journal
B) Purchase Journal
C) Cash Receipts Journal
D) General Journal

Question 43

Trade discounts are

A) Price reductions for bartered services
B) Price reductions from list prices
C) Price reductions from net prices
D) Price reductions for companies that trade goods and services

Question 44

Which of the following is true of special journals?

A) They provide details of individual figures of all the transactions in a financial year.
B) They save time in posting totals of the special columns to the general ledger.
C) They do not deal with the recording of cash transactions.
D) They are more efficient as they rule out the delegation of journalizing function to different people in an organization.

Question 45

The agreement between a seller and a buyer about payment on a purchase is called

A) Credit Period
B) Credit Terms
C) Credit Agreement
D) Purchase Agreement

Question 46

Indicate the appropriate columns in which the following transaction would be recorded in the cash payment journal: Paid rent for the month of January.

A)
$\begin{array} { l l } \text { Accounts Payable } & \text { DR } \\\text { Cash } & \text { CR }\end{array}$
B)
$\begin{array} { l l } \text { Other Accounts } & \text { DR } \\\text { Cash } & \mathrm { CR }\end{array}$
C)
$\begin{array} { l r } \text { Cash } & \text { DR } \\\text { Other Accounts } & \text { CR }\end{array}$
D)
$\text { Cash } \quad \text { DR }$
$\text { Accounts Payable } \quad \mathrm{CR}$

Question 47

What is the recommended order that special journals should be posted to the subsidiary ledgers and the general ledger?

A) Sales, Purchases, Cash Receipts, Cash Payments
B) Sales, Purchases, Cash Payments, Cash Receipts
C) Sales, Cash Receipts, Purchases, Cash Payments
D) No special order is recommended

Question 48

If merchandise bought on account has a list price of $5,000, with a trade discount of 25% and credit terms of 1/10, n/30, what is the amount to be credited to Accounts Payable?

A) $5,000
B) $3,750
C) $3,712.50
D) $3,787.50

Question 49

Indicate the appropriate columns in which the following transaction would be recorded in the cash receipts journal: Cash collected on account from a customer.

A)
$\begin{array} { l l } \text { Cash } & \text { DR } \\\text { Accounts Receivable }\end{array} \quad \text { CR }$
B)
$\begin{array} { l l } \text { Cash } & \text { DR } \\\text { Sales } & \text { CR }\end{array}$
C)
$\begin{array} { l r } \text { Cash } & \text { DR } \\\text { Other Account } & \text { CR }\end{array}$
D)
Accounts Receivable DR Cash $\quad$ CR

Question 50

Purchase of merchandise for cash would be recorded in which journal?

A) Purchase Invoice Journal
B) Cash Payments Journal
C) Supplemental Purchasing Journal
D) General Journal

Question 51

This journal contains all of the transactions from cash increasing

A) Cash Payment Journal
B) Sales Journal
C) Cash Receipts Journal
D) Purchase Journal

Question 52

The special journal that is used to record all transactions when cash decreases.

A) Cash receipts journal
B) Cash payments journal
C) Purchase journal
D) General Journal

Question 53

A period of time that the buyer is given by the seller to pay his or her purchases on account.

A) Credit Terms
B) Credit Agreement
C) Credit Period
D) Payment Period

Question 54

A sizable reduction from the list price of merchandise purchased that is NOT recorded on the buyers books.

A) Sales Discount
B) Purchase Discount
C) Trade Discount
D) Purchase Adjustment

Question 55

An "X" below the total amount of the Other Accounts column in the Cash Payment journal means

A) The column is in balance.
B) The column needs to be posted to the ledger.
C) Do not post the column total.
D) All checks posted are accounted for.

Question 56

Which of the following is NOT an advantage of the Cash Payment Journal?

A) Transactions are recorded on one line.
B) Transactions involving credits to cash are recorded in one place.
C) Special columns are not used in this journal.
D) The Cash credit side can be posted as one total.

Question 57

A written promise to pay a specified amount at a specified time

A) Promise to Pay
B) Accrued Note
C) Promissory Note
D) Specified Note

Question 58

Which of the following statements are true?

A) Trade discounts are not journalized.
B) Trade discounts are the same as sales discounts.
C) Trade discounts are related to cash payments.
D) Trade discounts are the same as purchase discounts.

Question 59

Which of the following is not an advantage of the cash receipts journal?

A) Transactions can be recorded on one line.
B) Transactions involving debits to cash are recorded in one place.
C) Special columns are not used in the cash receipts journal.
D) Posting repetition is eliminated.

Question 60

Sales of merchandise on account would be recorded in which journal?

A) Sales Journal
B) Sales Receipt Journal
C) Sales Payment Journal
D) General Journal

Question 61

Collection of a sale on account is recorded in the sales journal.

Question 62

The design of a cash payments journal can help the accountant reduce the number of postings required.

Question 63

The account used to record the reduction given to customers for prompt payments.

A) Purchases Discount
B) Purchases Returns & Allowances
C) Sales Discounts
D) Sales Returns and Allowances

Question 64

Entries in the Accounts Payable Debit column of the cash payments journal are posted daily to the accounts payable ledger.

Question 65

Transactions that increase the amount of cash are recorded in the cash payments journal.

Question 66

The total amount in the Cash Debit column of the cash receipts journal is posted monthly.

Question 67

In the cash receipts journal, the individual amounts in the Other Accounts column are posted at the end of the month.

Question 68

In the cash receipts journal, the total amount in the Other Accounts column is posted at the end of the month.

Question 69

A characteristic of the Sales Discount account is:

A) It has a Debit Normal Balance
B) It is a Contra-Asset Account
C) It records cash discounts given to customers for prompt payment
D) A & C

Question 70

Transactions for sales discounts affecting Accounts Receivable are recorded in the general journal.

Question 71

The column total for Other Accounts in the cash payments journal is not posted to the general ledger.

Question 72

The Sales Discounts account is recorded on the books of the seller.

Question 73

A credit to an account in the accounts payable ledger would have been posted from the cash payments journal if special journals are used.

Question 74

Which of the following refers to the cash discount granted by suppliers in return for prompt payments by buyers?

A) Trade Discount
B) Purchases Discount
C) Prompt Payment Discount
D) Scheduled Discount

Question 75

A purchase of merchandise on account is recorded in the cash payments journal.

Question 76

If the terms of sale are 1/10, n/30, the buyer has thirty days after the date of the invoice to take advantage of a 1 percent cash discount.

Question 77

If a part of merchandise previously sold is returned, the cash discount is calculated on the amount left after the return.

Question 78

A withdrawal of cash by the owner for personal use is recorded in the purchases journal.

Question 79

Sales Tax Payable is recorded on the books of the purchaser.

Question 80

An investment of cash by the owner is recorded in the general journal unless a cash receipts journal is used.