Accounting Ii Chapter 9

Front 1

Unlike a proprietorship, a corporation exists independent of its owners.

Back 1

T

Front 2

A corporation can incur liabilities but cannot own property.

Back 2

F

Front 3

As in a proprietorship, in formation in a corporation's accounting system is kept separate from the personal records of the owners, and this accounting concept is called a Business Entity.

Back 3

T

Front 4

The selling price of merchandise must be greater than the cost of merchandise for a business to make a profit.

Back 4

T

Front 5

The cost account Purchases is used only to record the value of merchandise purchased.

Back 5

T

Front 6

When purchases are recorded at their cost, including any related shipping costs and taxes, the Historical Cost accounting concept is being applied.

Back 6

T

Front 7

Recording entries in a journal with special amount columns saves time.

Back 7

T

Front 8

All purchase transactions, including purchases made on account and purchases made for cash, are recorded in the purchases journal.

Back 8

F

Front 9

The source document for recording a purchase on account transaction is a memorandum describing the merchandise purchased.

Back 9

F

Front 10

By listing the quantity, the description, the price of each item, and the total amount purchased, the Objective Evidence concept is applied.

Back 10

T

Front 11

A purchase invoice usually lists only the total cost of the merchandise.

Back 11

F

Front 12

A purchase on account transaction increases the amount owed to a vendor.

Back 12

T

Front 13

A cash payments journal includes a special amount column for the cash account and the accounts payable account.

Back 13

T

Front 14

The source document for most cash payments is the check issued.

Back 14

T

Front 15

When supplies are purchased for use in the business, the amount is recorded in the purchases account.

Back 15

F

Front 16

A special journal entry is made to show the amount of a trade discount.

Back 16

F

Front 17

The terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid within 15 days of the invoice date or the total invoice amount must be paid within 30 days.

Back 17

T

Front 18

Purchase discounts are recorded in the general journal.

Back 18

F

Front 19

The contra account Purchases Discount has a normal credit balance.

Back 19

T

Front 20

The custodian prepares a petty cash report when the petty cash fund is to be replenished.

Back 20

T

Front 21

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

Back 21

F

Front 22

A journal is proved and ruled only at the end of a fiscal period.

Back 22

F

Front 23

To begin a new journal page, the totals from the previous journal page are carried forward to the next journal page.

Back 23

T

Front 24

Buying supplies on account is recorded in the general journal.

Back 24

T

Front 25

When store supplies are purchased on account, the Store Supplies account balance increases and the Accounts Payable account balance increases.

Back 25

T

Front 26

The source document for a purchases return is a check.

Back 26

F

Front 27

The normal account balance of Purchases Returns and Allowances is a credit.

Back 27

T