Question 1

Big Industries purchased products from Small Suppliers,paying $5 000 in cash and promising to pay the remaining $5 000 in 30 days.Assuming the use of special journals,this entry would be recorded by Big Industries in the:

Accepted Answer

The purchase of goods from Small Suppliers will be recorded in the purchases journal as it is a credit purchase transaction. The payment of $5,000 in cash will be recorded in the cash payments journal. Therefore, this entry will be recorded in both the purchases journal and the cash payments journal.

Question 2

Ruby Gems purchases inventory from Diamond Mining.On 3 September,they received a credit note from Diamond Mining as they had been charged $3.85 rather than $3.58 for each of the 100 items purchased.What entry will Diamond Mining make? Ignore GST.

Accepted Answer

Sales returns and allowances is a contra-revenue account that is used to reduce revenue. When a customer returns merchandise, the seller will issue a credit note to the customer and record the transaction in the sales returns and allowances account. The inventory account is also debited to reflect the decrease in inventory.

Question 3

Entries in the purchases journal are posted to the:

Accepted Answer

The purchases journal records all purchases made on credit, which are then posted to the general ledger and the accounts payable subsidiary ledger. The general ledger is the main accounting record for the company, while the accounts payable subsidiary ledger is a detailed record of all outstanding invoices and payments owed to suppliers. Therefore, the purchases journal must be posted to both ledgers to keep accurate records of purchases and payments.

Question 4

The accounts payable subsidiary ledger has postings from which set of journals?

Accepted Answer

The accounts payable subsidiary ledger contains information about a company's outstanding debts to suppliers or vendors. The journals that typically contain postings related to accounts payable include the purchases journal, the cash payments journal, and the general journal. Therefore, the best choice would be D, which lists all three of these journals.

Question 5

The accounts payable subsidiary ledger controls the accounts payable account in the general ledger.

Accepted Answer

The answer of The accounts payable subsidiary ledger controls the...

Question 6

A company has four vendors and the accounts payable subsidiary ledger shows the following balances. $$\begin{array} { | l | l | } 
\hline \text { Alpha } & \$ 282,821 \
\hline \text { Beta } & 151,474 \
\hline \text { Gamma } & 38,943 \
\hline \text { Delta } & 37,187 \
\hline
\end{array}$$ Calculate the accounts payable balance in the general ledger.

Accepted Answer

The answer of A company has four vendors and the...

Question 7

The journal in which all transactions that do not fit into the special journals are recorded is the:

Accepted Answer

The general journal is used for recording all transactions that cannot be recorded in the special journals. These may include adjusting entries, correcting entries, and unusual transactions. The cash receipts journal is used for recording all cash received, the purchases journal is used for recording all purchases made on credit, and the sales journal is used for recording all sales made on credit.

Question 8

The purchase of office equipment on credit would be recorded in:

Accepted Answer

The purchase of office equipment on credit is recorded in the purchases journal, which is used for recording credit purchases of goods and services.

Question 9

Which journals would have a column for GST?

Accepted Answer

GST or Goods and Services Tax is a form of indirect tax imposed on the supply of goods and services in India. As all the special journals include specific transactions, it is possible that some of these transactions may involve the collection or payment of GST. Therefore, it is likely that special journals would have a column for GST. However, it cannot be determined with certainty which specific special journal would have a column for GST without more information.

Question 10

If creditors are paid within the discount period,the current treatment required by the accounting standards for the discount received is to:

Accepted Answer

When creditors are paid within the discount period, the discount received is credited to the Inventory account, reducing the cost of inventory, as per accounting standards.

Question 11

The transaction that would not be recorded in the general journal is

Accepted Answer

The credit purchase of goods for resale is a transaction that would be recorded in the Purchases Journal, not the general journal. Therefore, it is not an appropriate answer. B, C, and D are all transactions that would be recorded in the general journal.

Question 12

On 4 May,a retail firm pays a rent of $2200 for the month of April.Which of the following is true when this transaction is recorded in a cash payment journal?

Accepted Answer

The payment of rent decreases the firm's cash (an asset) and also decreases retained earnings (part of equity) as it is an expense.

Question 13

With a manual accounting system,adjusting and closing entries:

Accepted Answer

Adjusting and closing entries are recorded in the general journal in a manual accounting system. This journal is used to record transactions that cannot be recorded in the specialized journals such as cash receipts or payments. Adjusting entries are made at the end of an accounting period to update accounts before preparing financial statements, while closing entries are made to transfer balances of temporary accounts to the permanent accounts at the end of a fiscal period.

Question 14

If special journals are used,the purchase of inventory for cash would be recorded in the cash payments journal.

Accepted Answer

The cash payments journal is a type of special journal used to record all cash payments, including inventory purchases made for cash. Therefore, if special journals are used, the purchase of inventory for cash would be recorded in the cash payments journal.

Question 15

Some transactions can be recorded in both the general journal and the special journals.

Accepted Answer

The answer of Some transactions can be recorded in both...

Question 16

Bryson Company records returns and allowances in the general journal.On 25 June,Bryson issued a $120 debit note for goods purchased on credit from Crimson because part of what was sent was not what Bryson ordered.What entry does Bryson make? Ignore GST and assume a perpetual inventory system.

Accepted Answer

Bryson should debit Accounts Payable-Crimson to reduce the liability and credit Inventory to reflect the return of goods in a perpetual inventory system.

Question 17

Pierce Arrows sold a piece of land for $800 000,accepting a 10-year loan receivable for the amount.Assuming the use of special journals,this entry would be recorded in the:

Accepted Answer

The sale of land on credit would be recorded in the general journal because it involves a non-routine transaction that does not fit into the specialized journals like cash receipts or sales journal, which are used for routine transactions.

Question 18

When a business returns goods to the seller,it may accompany the goods with a document known as a:

Accepted Answer

When a business returns goods to the seller, it may accompany the goods with a document known as a debit memo or a credit note. A debit memo is used to reduce the amount owed to the seller, while a credit note is used to increase the amount owed to the seller.

Question 19

The general journal is used to record all transactions that do not fit one of the special journals.

Accepted Answer

The general journal is used to record transactions that do not fit in any of the special journals. These transactions could be things like adjusting entries, closing entries, or any other transactions that do not involve the buying or selling of goods, cash receipts or cash disbursements.

Question 20

Which of the following is an alternative title for the cash payments journal?

Accepted Answer

All three options are alternative titles for the same journal. The cash payments journal is also known as the payments register or cash disbursements journal. Therefore, option D is the correct answer.

Quiz 7: Accounting Information Systems