Question 1) The entry to record a purchase of merchandise on credit

29 Jun Question 1) The entry to record a purchase of merchandise on credit

Question
1) The entry to record a purchase of merchandise on credit includes a:

A. debit to Purchases and a credit to Accounts Receivable.

B. credit to Purchases and a credit to Accounts Payable.

C. debit to Accounts Payable and a credit to Purchases.

D. debit to Purchases and a credit to Accounts Payable.

2) Freight charges on merchandise purchases should be debited to the:

A. Purchases account.

B. Accounts Payable account.

C. Freight In account.

D. creditor’s account in the subsidiary ledger.

3) The Purchases account is a __________ account.

A. permanent

B. temporary

C. subsidiary

D. liability

4) Purchases of merchandise on credit should be recorded in the __________ journal.

A. purchases

B. general

C. cash payments

D. sales

5) Credit terms of 1/10, n/30 mean that:

A. payment in full is due 10 days after date of the invoice.

B. payment in full is due 30 days after date of the invoice.

C. if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 20 days.

D. if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days.

6) Postings to the accounts payable ledger from the purchases journal should be made:

A. daily.

B. weekly.

C. monthly.

D. at the end of the fiscal period.

7)A creditor’s account in the accounts payable ledger has a $1,600 beginning balance. After a transaction for $700 is posted from the purchases journal, the balance of the creditor’s account is:

A. $2,300 debit.

B. $900 credit.

C. $2,300 credit.

D. $900 debit.

8) To record a return of merchandise purchased on credit, the accountant would debit __________ and credit __________.

A. Purchases Returns and Allowances; Accounts Receivable

B. Purchases Returns and Allowances; Purchases

C. Accounts Payable; Purchases Returns and Allowances

D. Purchases; Purchases Returns and Allowances

9) The total of the balances in the creditor’s accounts should agree with the balance of the __________ account in the general ledger.

A. Purchases

B. Accounts Receivable

C. Accounts Payable

D. Sales

10) The amount of the purchases for a period is presented in the:

A. Liabilities section of the balance sheet.

B. Revenue section of the income statement.

C. Cost of Goods Sold section of the income statement.

D. Expenses section of the income statement.

11) A firm had purchases of $16,200, freight charges of $300, and purchases returns and allowances of $1,100 during one month. Its net delivered cost of purchases was:

A. $14,800.

B. $17,600.

C. $16,200.

D. $15,400.

12) In a firm that uses special journals, the return of damaged merchandise to a supplier and receipt of a credit memorandum is recorded in the __________ journal.

A. cash payments

B. cash receipts

C. purchases

D. general

13) When the sales department needs goods, it sends the purchasing department a form called a:

A. purchase invoice.

B. purchase order.

C. purchase requisition.

D. sales invoice.

14) Credit purchases of supplies that are to be used in the business are entered in the __________ journal.

A. purchases

B. general

C. cash payments

D. cash receipts

15) After a supplier of merchandise is selected, the purchasing department issues a form called a:

A. purchase invoice.

B. purchase order.

C. sale invoice.

D. purchase requisition.

16) Which of the following statements is correct?

A. Freight In is subtracted from Purchases to arrive at delivered cost of purchases.
B. Another name that may be used for the Freight In account is “Transportation In.”
C. Freight charges that are listed on the invoice received from a supplier are not part of the total credit to Accounts Payable to record the credit purchase.
D. None of these statements is correct

17) Which of the following accounts is a contra cost of goods sold account?

A. Accounts Payable

B. Cash

C. Purchases

D. Purchases returns and allowances

18) The account of a creditor in the accounts payable ledger had a balance at the beginning of the month of $3,000. During the month total postings to the account from the purchases journal were $500. Also, there was a posting of $300 to the account from the general journal for a purchase return. The balance of the creditor account at the end of the month would be:

A. $2,200.

B. $2,800.

C. $3,000.

D. $3,200.

19) Which of the following represents a bill received for goods purchased?

A. Purchase invoice

B. Purchase order

C. Purchase requisition

D. Purchases journal

20) Which of the following credit terms is offering the customer a 3% cash discount if payment is made within 5 days of the invoice date?