Question 1

In a perpetual inventory system, when cash sales are recorded:
A)merchandise inventory decreases and cost of goods sold decreases.
B)sales revenue increases and cash decreases.
C)sales revenue increases and equity decreases.
D)merchandise inventory decreases and equity decreases.

Accepted Answer

In a perpetual inventory system, recording cash sales involves increasing sales revenue and decreasing merchandise inventory, which affects equity.

Question 2

If a business uses the periodic inventory system, the sales journal:
A)will record both the cash and credit sales.
B)will include a Purchase DR and Account Receivable CR column.
C)will exclude the Accounts Receivable DR and Sales Revenue CR column.
D)will not include the Cost of Goods Sold DR and Merchandise Inventory CR column.

Accepted Answer

In a periodic inventory system, the Cost of Goods Sold and Merchandise Inventory accounts are not updated continuously with each sale. Instead, these accounts are updated at the end of the accounting period, so the sales journal will not include these columns.

Question 3

When a sales journal is posted to the general ledger at the end of the month, the accountant totals the Accounts Receivable DR, Sales Revenue CR and Cost of Goods Sold DR, Merchandise Inventory CR columns. This process is commonly called:
A)scalping.
B)ticking.
C)footing.
D)framing.

Accepted Answer

The process of totaling the columns in the sales journal is called "footing." This ensures that the accounts in the sales journal agree with the accounts in the general ledger. "Scalping" and "framing" are not relevant accounting terms, and "ticking" refers to marking specific items or transactions within a document, rather than totaling columns.

Question 4

Which of the following will be recorded in the Other Accounts CR column of the cash receipts journal?
A)cash sales
B)receipt of interest revenue
C)receipt of accounts receivable
D)sales discounts

Accepted Answer

The Other Accounts CR column is used to record any cash receipts that cannot be classified into the main categories of cash sales, accounts receivable, or sales discounts. Receipt of interest revenue would fall into this category.

Question 5

Tangent Corporation makes a $1,200 purchase of merchandise inventory on account. This transaction will be recorded in the:
A)cash payments journal.
B)sales journal.
C)cash receipts journal.
D)purchases journal.

Accepted Answer

The purchases journal is used to record purchases of merchandise on account, which is exactly what this transaction is. Therefore, the best choice is D.

Question 6

Which of the following is true of posting from a sales journal to the general ledger?
A)Entries in the sales journal are posted to either the accounts receivable subsidiary ledger or the general ledger.
B)Individual accounts receivable are posted daily from the sales journal to the accounts receivable subsidiary ledger.
C)Though the sales journal is posted monthly to the subsidiary ledger, it is a reliable record of the amount receivable from each customer.
D)Under a perpetual inventory system, the sales journal will not have the Cost of Goods Sold DR and Merchandise Inventory CR column.

Accepted Answer

Posting from the sales journal to the general ledger involves posting individual accounts receivable from the sales journal to the accounts receivable subsidiary ledger on a daily basis. This ensures that the accounts receivable subsidiary ledger always reflects the most accurate information on the outstanding balances owed by each customer. The general ledger is then updated periodically, such as monthly, to reflect the total sales and accounts receivable for the period.

Question 7

Multi Corporation sold merchandise for $4,450 to Susan on credit. The cost of goods sold was $1,185. Assuming that the firm is following a perpetual inventory system, it will record $4,450 in the:
A)general journal.
B)Accounts Receivable DR, Sales Revenue CR column of the sales journal.
C)Merchandise Inventory DR column of the purchases journal.
D)Accounts Receivable CR column of cash receipts journal.

Accepted Answer

Since the transaction is a credit sale, it should be recorded in the Sales Journal. The Accounts Receivable account will be debited for the amount of the sale, and the Sales Revenue account will be credited.

Question 8

Hexa Corporation sold a product on credit for $2,235 to Merin. The cost of goods sold was $1,324. Assuming that the firm is following a perpetual inventory system and using a sales journal, it will record $2,235 in the:
A)Accounts Receivable CR, Sales Revenue DR column.
B)Cost of Goods Sold DR, Merchandise Inventory CR column.
C)Merchandise Inventory DR, Cost of Goods Sold CR column.
D)Accounts Receivable DR, Sales Revenue CR column.

Accepted Answer

When a product is sold on credit, the firm records an increase in Accounts Receivable, as it is yet to receive payment. At the same time, it records an increase in Sales Revenue, as the product has been sold. Therefore, $2,235 will be recorded in the Accounts Receivable DR, Sales Revenue CR column. The Cost of Goods Sold is recorded separately, as it is an expense directly related to the sale of the product. Therefore, option B and C can be eliminated. Option A is incorrect because Accounts Receivable is a debit account and cannot be credited.

Question 9

Deal Corporation sells a product for $500 cash to Liza. This transaction will be recorded in the:
A)cash payments journal.
B)sales journal.
C)cash receipts journal.
D)purchase journal.

Accepted Answer

The cash receipts journal is used to record all cash inflows, including cash sales. Since Deal Corporation received $500 in cash from Liza, this transaction is recorded in the cash receipts journal.

Question 10

A CR.5 posting reference in a subsidiary ledger indicates that:
A)the posting is transferred from the cash receipts journal, page 5.
B)the transaction in page number 5 is credited.
C)the credited amount is after a 5% discount.
D)the sales on credit is expected to be paid within 5 days.

Accepted Answer

The CR.5 posting reference indicates that the entry was posted from the cash receipts journal, specifically from page 5.

Question 11

The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Accepted Answer

The statement is true. The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Question 12

Which of the following is not included in a typical cash receipts journal of a business using the perpetual inventory system?
A)Interest Revenue CR column
B)Cost of Goods Sold DR, Merchandise Inventory CR column
C)Sales Revenue CR column
D)Other Accounts CR column

Accepted Answer

The interest revenue is not related to the sale of merchandise and is not typically recorded in the cash receipts journal for businesses using the perpetual inventory system. The other three options are commonly recorded in the cash receipts journal.

Question 13

Which of the following is true of a sales journal prepared under the perpetual inventory system?
A)It includes a Cost of Goods Sold DR, Merchandise Inventory CR column.
B)It records both cash and credit sales transactions.
C)All transactions recorded in a sales journal are also entered in the general journal.
D)It cannot be used with a perpetual inventory system.

Accepted Answer

In a perpetual inventory system, each sale transaction is recorded with a Cost of Goods Sold debit and a Merchandise Inventory credit to reflect the immediate update of inventory levels and cost.

Question 14

Which of the following is true of a cash receipts journal?
A)In a cash receipts journal, cash sales are recorded in the Accounts Receivable CR column and the Cash DR column.
B)In a cash receipts journal, collections on account are recorded in the Accounts Receivable DR column and the Cash DR column.
C)It ignores the miscellaneous cash receipt transactions.
D)In a cash receipts journal, the sales for cash will have entries in the Sales Revenue CR column.

Accepted Answer

In a cash receipts journal, cash sales are recorded with entries in the Sales Revenue CR column to reflect the revenue generated from cash sales.

Question 15

Tangent Corporation makes a $1,200 purchase of merchandise inventory for cash. This transaction will be recorded in the:
A)cash payments journal.
B)general journal.
C)cash receipts journal.
D)purchase journal.

Accepted Answer

The cash payments journal is used to record all transactions involving cash outflows, such as cash purchases of inventory.

Question 16

Deal Corporation sells a product for $500 on account to Liza. This transaction will be recorded in the:
A)cash payments journal.
B)sales journal.
C)cash receipts journal.
D)purchase journal.

Accepted Answer

The sales journal is used to record sales made on account. The other options do not apply to this transaction - there is no cash payment made, no cash deposit or collection, and no purchase of inventory.

Question 17

Every transaction recorded in the cash receipt journal includes a:
A)credit to cash.
B)debit to accounts receivable.
C)credit to accounts receivable.
D)debit to cash.

Accepted Answer

Every transaction recorded in the cash receipt journal includes a debit to cash, because it is the account receiving the funds. Other accounts may also be credited depending on the transaction, such as accounts receivable if a customer is paying off a balance. However, the one constant is the debit to cash.

Question 18

Tangent Corporation sold a product for $7,150 to Michael on credit. The cost of goods sold is $5,650.Assuming that the firm is following a perpetual inventory system and using a sales journal, it will record $5,650 in the:
A)Accounts Receivable DR, Sales Revenue CR column.
B)Cost of Goods Sold DR, Merchandise Inventory CR column.
C)Merchandise Inventory DR, Cost of Goods Sold CR column.
D)Sales Revenue DR, Accounts Receivable CR column.

Accepted Answer

In a perpetual inventory system, the cost of goods sold is recorded by debiting the Cost of Goods Sold account and crediting the Merchandise Inventory account.

Question 19

Cash purchases are recorded in the purchases journal.

Accepted Answer

Cash purchases are recorded in the cash payments journal, not the purchases journal. The purchases journal is used to record credit purchases.

Question 20

Depreciation of fixed assets is recorded in a:
A)cash payments journal.
B)sales journal.
C)cash receipts journal.
D)general journal.

Accepted Answer

Depreciation of fixed assets is a non-cash transaction and is recorded in the general journal.

Quiz 7: Accounting Information Systems

In a perpetual inventory system, when cash sales are recorded:

If a business uses the periodic inventory system, the sales journal:

When a sales journal is posted to the general ledger at the end of the month, the accountant totals the Accounts Receivable DR, Sales Revenue CR and Cost of Goods Sold DR, Merchandise Inventory CR columns. This process is commonly called:

Which of the following will be recorded in the Other Accounts CR column of the cash receipts journal?

Tangent Corporation makes a $1,200 purchase of merchandise inventory on account. This transaction will be recorded in the:

Which of the following is true of posting from a sales journal to the general ledger?

Multi Corporation sold merchandise for $4,450 to Susan on credit. The cost of goods sold was $1,185. Assuming that the firm is following a perpetual inventory system, it will record $4,450 in the:

Hexa Corporation sold a product on credit for $2,235 to Merin. The cost of goods sold was $1,324. Assuming that the firm is following a perpetual inventory system and using a sales journal, it will record $2,235 in the:

Deal Corporation sells a product for $500 cash to Liza. This transaction will be recorded in the:

A CR.5 posting reference in a subsidiary ledger indicates that:

The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Which of the following is not included in a typical cash receipts journal of a business using the perpetual inventory system?

Which of the following is true of a sales journal prepared under the perpetual inventory system?

Which of the following is true of a cash receipts journal?

Tangent Corporation makes a $1,200 purchase of merchandise inventory for cash. This transaction will be recorded in the:

Deal Corporation sells a product for $500 on account to Liza. This transaction will be recorded in the:

Every transaction recorded in the cash receipt journal includes a:

Tangent Corporation sold a product for $7,150 to Michael on credit. The cost of goods sold is $5,650.Assuming that the firm is following a perpetual inventory system and using a sales journal, it will record $5,650 in the:

Cash purchases are recorded in the purchases journal.

Depreciation of fixed assets is recorded in a: