Deck 9: Accounting for Purchases and Cash Payments

Question 1

A transaction to record merchandise purchased with a trade discount would include a debit to Merchandise Discount.

Answer 1

False

Question 2

The petty cash account Cash Short and Over is a temporary account.

Answer 2

True

Question 3

A corporation can own property, incur liabilities, and enter into contracts in its own name.

Answer 3

True

Question 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.

Question 5

The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, Accounts Payable.

Question 6

A merchandising business places Purchases in the Operating Expenses section of the income statement.

Question 7

The periodic inventory method does not require records of the quantity and cost of individual goods.

Question 8

The total of a schedule of accounts payable less purchases discounts taken during the month will equal the total of Accounts Payable.

Question 9

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.

Question 10

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.

Question 11

The Purchases account is classified as a(n)

A) expense account.
B) asset account.
C) liability account.
D) cost of goods sold account.

Question 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.

Question 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.

Question 14

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.

Question 15

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.

Question 16

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.

Question 17

Select the one term that best fits each definition.

-A merchandising business that sells to those who use or consume the goods.

A) articles of incorporation
B) cash discount
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

Question 18

Select the one term that best fits each definition.

-A business that buys and resells merchandise primarily to other merchandising businesses.

A) articles of incorporation
B) cash discount
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

Question 19

Select the one term that best fits each definition.

-Each unit of ownership in a corporation.

A) articles of incorporation
B) cash discount
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

Question 20

Select the one term that best fits each definition.

-An organization with the legal rights of a person which many persons or other corporations may own.

A) articles of incorporation
B) cash discount
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

Question 21

Select the one term that best fits each definition.

-The owner of one or more shares of stock.

A) articles of incorporation
B) cash discount
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

Question 22

Select the one term that best fits each definition.

-A legal document that identifies basic characteristics of a corporation.

A) articles of incorporation
B) cash discount
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

Question 23

Select the one term that best fits each definition.

-An account in a general ledger that summarizes all accounts in a subsidiary ledger.

A) articles of incorporation
B) cash discount
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

Question 24

Select the one term that best fits each definition.

-The retail price listed in a catalog or on an Internet site.

A) articles of incorporation
B) cash discount
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

Question 25

Select the one term that best fits each definition.

-A reduction in the list price granted to a merchandising business.

A) articles of incorporation
B) cash discount
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

Question 26

Select the one term that best fits each definition.

-An agreement between a buyer and a seller about payment for merchandise.

A) articles of incorporation
B) cash discount
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

Question 27

Select the one term that best fits each definition.

-A merchandise inventory evaluated at the end of a fiscal period.

A) articles of incorporation
B) cash discount
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

Question 28

Select the one term that best fits each definition.

-An account that reduces a related account on a financial statement.

A) articles of incorporation
B) cash discount
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

Question 29

Select the one term that best fits each definition.

-A form requesting the purchase of merchandise.

A) articles of incorporation
B) cash discount
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

Question 30

Select the one term that best fits each definition.

-An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise.

A) articles of incorporation
B) cash discount
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

Question 31

Select the one term that best fits each definition.

-A form requesting that a vendor sell merchandise to a business.

A) articles of incorporation
B) cash discount
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

Question 32

Select the one term that best fits each definition.

-A journal used to record only one kind of transaction.

A) articles of incorporation
B) cash discount
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

Question 33

Select the one term that best fits each definition.

-A deduction that a vendor allows on an invoice amount to encourage prompt payment.

A) articles of incorporation
B) cash discount
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

Question 34

Select the one term that best fits each definition.

-A journal amount column that is not headed with an account title.

A) articles of incorporation
B) cash discount
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

Question 35

Select the one term that best fits each definition.

-The maximum outstanding balance allowed to a customer by a vendor.

A) articles of incorporation
B) cash discount
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

Question 36

Select the one term that best fits each definition.

-A listing of vendor accounts, account balances, and the total amount due to all vendors.

A) articles of incorporation
B) cash discount
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