1. Chapter 9

2. 9.1

3. What kinds of transactions are recorded in a purchases journal? A) Merchandise bought on account B) All cash payments C) Sale of merchandise on account D) All cash received

4. A

5. For what are special amount columns in a journal used? A) Frequently occuring transactions B) Rarely occuring transactions C) Special transactions D) None of the above

6. A

7. Why are there two account titles in the amount column of the purchases journal? A) All purchases on account involve a debit to Purchases and a credit to Accounts Payable B) All sales on account involve a debit to Purcahses and a credit to Accounts Payable C) All purchases on account involve a debit to Accounts Payable and a credit to Purchases D) All sales on account involve a debit to Accounts Payable and a credit to Purchases

8. A

9. What is the advantage of having special amount columns in a journal? A) It saves time B) It eliminates the need for recording the account number C) It enables the records to be more thorough D) All of the above

10. A

11. What type of account is Purchase Account? A) Cost account B) Expense account C) Asset account D) Liability account

12. A

13. Which of the following statements is true regarding Purchases accounts? A) Purchases is a temporary account because the purchase of merchandise always reduces capital. B) Purchases is a permanent account because the purchase of merchandise always reduces capital. C) Purchases is a temporary account because the purchase of merchandise always increases capital. D) Purchases is a permanent account because the purchase of merchandise always increases capital.

14. A

15. The company purchased merchandise on account from Crown Distributing, $2,039. Which transaction is correct? A) Debit Purchases, Credit Accounts Payable B) Debit Accounts Payable, Credit Purchases C) Debit Purchases, Debit Accounts Payable D) Credit Accounts Payable, Credit Purchases

16. A

17. The source document for purchase accounts are which of the following? A) Purchase Invoice B) Purchase Receipt C) Purchase Check D) Purchase Memorandum

18. A

19. 9.2

20. Why would a vendor offer a cash discount to a customer? A) To encourage early payment B) To encourage payment with a credit card C) To encourage repeat business D) To offer a tax break

21. A

22. Which of the following are NOT recorded in the general amount columns of the cash payments journal? A) Cash payment of expenses B) Cash payment for supplies C) Cash payment for purchases D) Cash payment on account

23. D

24. What is the difference between purcahsing merchandise and buying supplies? A) Supplies are used in the business whereas the Purchase account is for merchandise intended to be sold B) Supplies are intended to be sold whereas merchandise purchased and recorded in the Purchase account are used in the business C) Supplies are lower priced items whereas merchandise bought and recorded in the Purchase account are for items larger than $40 D) None of the answers are correct

25. A

26. What is meant by terms of sale 2/10, n/30? A) 2% discount if amount paid in full within 10 days, full amount due in 30. B) $2 off if amount paid in full within 10 days, no discount if paid within 30 days. C) $2-10 discount if amount paid within 30 days. D) 2% discount for every $10 purchased up to $30 of purchase amount

27. A

28. The company paid cash for advertising, $150. Which of the following transactions would be appropriate? A) Debit Advertising Expense, Credit Cash B) Debit Cash, Credit Advertising Expense C) Debit Advertising Expense, Credit Accounts Payable D) Debit Accounts Payable, Credit Cash

29. A

30. The company paid cash for office supplies, $94. Which of the following transactions would be correct? A) Debit Office Supplies, Credit Cash B) Debit Cash, Credit Office Supplies C) Debit Account Payable, Credit Cash D) Debit Purcahse Discount, Credit Cash

31. A

32. The company purchased merchandise for cash, $600. Which of the following transactions would be accurate? A) Debit Purchases, Credit Cash B) Debit Accounts Payable, Credit Cash C) Debit Purchase Discount, Credit Cash D) None of the answers are correct

33. A

34. The company paid cash on account to Gulf Craft Supply, $488.04, covering original charge of $498, less 2% discount of $9.96. Which of the following would be accurate? A) Debit Account Payable, Credit Purchase Discount and Cash B) Debit Account Payable and Purchase Discount, Credit Cash C) Debit Supplies, Credit Purchase Discount and Cash D) Debit Supplies and Purchase Discount, Credit Cash

35. A

36. What is the source document for a cash purchase? A) Check B) Memorandum C) Receipt D) Invoice

37. A

38. 9.3

39. When journalizing a cash payment to replenish petty cash, what is entered in the Account Title column of the cash payments journal? A) Petty Cash B) The various accounts which incurred charges C) Cash D) None of the answers are correct

40. B

41. What is the usual balance of the Cash Short and Over account and why? A) Debit because petty cash is more likely to be short B) Credit because petty cash is more likely to be short C) Debit because petty cash is more likely to be over D) Credit because petty cash is more likely to be over

42. A

43. The company paid cash to replenish the Petty Cash Fund, $208.66; Office Supplies $32.33, Advertising $50, Miscellaneous $128.50, Cash Over $2.17 A) DEBIT Office Supplies, Advertising Expense, Misc. Expense, CREDIT Cash Short and Over, and Cash B) DEBIT Supplies Expense, Advertising Expense, Misc. Expense, CREDIT Cash Short and Over, and Cash C) DEBIT Supplies Expense, Advertising Expense, Misc. Expense, Cash Short and Over, CREDIT Cash D) DEBIT Office Supplies, Advertising Expense, Misc. Expense, Cash Short and Over, CREDIT Cash

44. A

45. When is a journal page proved and ruled? A) When the journal page is full and at the end of the month B) Only when the journal page is full C) Only at the end of the month D) None of the answers are correct

46. A

47. What account title is used when proving and ruling a journal page? A) Carried Forward B) Brought Forward C) Totals D) Proving and Ruling

48. A

49. What is the account title when starting a new journal page? A) Carried Forward B) Brought Forward C) Totals D) Balance

50. B

51. What account title is used when totaling, proving and ruling the cash payment journal? A) Carried Forward B) Brought Forward C) Totals D) None of the above

52. C

53. 9.4

54. What journal is used to record transactions that cannot be recorded in special journals? A) Cash Payment Journal B) Cash Receipt Journal C) Purchase Journal D) General Journal

55. D

56. Why is a memorandum used as a source document when supplies are bought on account? A) Because the invoice for the supplies looks similar to a purcahse invoice so the memo ensures the Supplies account is debited rather than the Purchases account B) Because this is the type of source document Office Supply stores use to track purchases by their customers C) Because the memorandum can more easily be attached to the check when payment is made D) All of these answers are correct

57. A

58. Why are two account titles written for the credit amount when supplies are bought on account? A) Because both the Accounts Payable and the vendor account are affected by the transaction B) Because the Accounts Payable account is affected by the transaction C) Because the vendor account is affected by the transaction D) None of the answers are correct

59. A

60. When is the equality of debits and credits proved for a general journal? A) At the end of the month B) At the end of the page C) After each transaction D) At the end of the year

61. C

62. If purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account? A) It allows a company to track amount of purchase returns and allowances to a specific fiscal period B) It allows a company to track amount of purchase returns and allowances to multiple fiscal periods C) It allows a company to contact people who have made recent purchase returns and allowances D) None of the answers are correct

63. A

64. What is a primary difference between a purchases return and a purchases allowance? A) Return is when a customer takes part or all of the merchandise back to the store and receives store credit whereas "allowance" refers to merchandise that is damaged but usable so the customer keeps the merchandise but pays less for it B) Allowance is when a customer takes part or all of the merchandise back to the store and receives store credit whereas "return" refers to merchandise that is damaged but usable so the customer keeps the merchandise but pays less for it C) Return is when the customer brings merchandise back to the store and exchanges it for the exact same item whereas "allowance" refers to when a customer brings merchandise back and exchanges it for any merchandise priced within $2 of the original price D) Allowance is when the customer brings merchandise back to the store and exchanges it for the exact same item whereas "return" refers to whe a customer brings merchandise back and exchanges it for any merchandise priced within $2 of the original price

65. A

66. When is a debit memorandum a proper source document for a purchases return or allowance? A) When the customer has a decrease in the amount they owe B) When the customer has an increase in the amount they owe C) When the customer's bill remains unchanged D) None of these are correct

67. A

68. The company bought store supplies on account from Gulf Craft Supply, $210. Which of the following would be the correct entry? A) Debit Supplies - Store, Credit Accounts Payable and Gulf Craft Supply B) Debit Accounts Payable and Gulf Craft Supply, Credit Supplies - Store C) Debit Supplies - Store and Gulf Craft Supply, Credit Accounts Payable D) Debit Accounts Payable, Credit Supplies - Store and Gulf Craft Supply

69. A

70. The company returned merchandise to Crown Distributing, $252. Which of the following would be the correct entry? A) Debit Accounts Payable and Crown Distributing, Credit Purchases Return and Allowances B) Debit Purchases Return and Allowances, Credit Accounts Payable and Crown Distributing C) Debit Accounts Payable, Credit Crown Distributing and Purchases Returns and Allowances D) Debit Crown Distributing and Purchases Returns and Allowances, Credit Accounts Payable

71. A

72. Which of the following accurately describes the Purchases Returns and Allowances account? A) It is a contra account to Purchases B) It is a contra account to Sales C) It is a cost account to Purchases D) It is an expense account

73. A

74. What is the normal balance of the Purchases Returns and Allowances A) The same normal balance as the Purchases account B) The opposite normal balance as the Purchases account C) The same normal balance as the Sales account D) The opposite normal balance as the Sales account

75. B