Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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A business expecting to make money and continue in business indefinitely is
applying the accounting concept ____.
a. | Business Entity | c. | Objective Evidence | b. | Going Concern | d. | Historical Cost |
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2.
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Special amount columns are used for transactions that occur ____.
a. | once every month | c. | infrequently | b. | frequently | d. | once during the fiscal
year |
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3.
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The amount of sales tax on a sale is calculated as price of goods ____.
a. | plus the sales tax rate | c. | minus the sales tax
rate | b. | times the sales tax rate | d. | divided by the sales tax rate |
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4.
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When merchandise is sold on account and sales tax is also collected,
____.
a. | Accounts Receivable is credited for the total sale and sales tax | b. | the accounts
receivable account balance is increased | c. | Sales is debited for the price of the
goods | d. | the sales tax is not reported |
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5.
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Recording revenue from transactions at the time goods or services are sold is an
application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Realization of
Revenue | b. | Objective Evidence | d. | Business Entity |
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6.
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The journal entry for a cash and credit card sales transaction is ____.
a. | debit Cash; credit Sales; credit Sales Tax Payable | b. | debit Cash; debit
Sales Tax Payable; credit Sales | c. | debit Sales; credit Cash; credit Sales Tax
Payable | d. | debit Sales Tax Payable; debit Cash; credit Sales |
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7.
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The price a business pays for goods it purchases to sell is ____.
a. | cost of goods sold | c. | markup | b. | cost of merchandise | d. | cost of sales |
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8.
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When a debit is posted to the accounts payable ledger, ____.
a. | the debit amount is written in the Debit column of the account | b. | the cash account
increases | c. | the controlling account is increased by the entry | d. | all of the
above |
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9.
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To open a new customer account, ____.
a. | the customer name is obtained from the first invoice prepared | b. | the customer number
is assigned | c. | the customer name and number are written on the account form | d. | all of the
above |
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10.
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If a customer buys $300.00 worth of merchandise and the sales tax is 8%, the
total bill the customer must pay is ____.
a. | $300.00 | c. | $324.00 | b. | $304.00 | d. | $342.00 |
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11.
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When posting the Accounts Receivable Credit column total of the cash receipts
journal, return to the journal and write ____.
a. | the account number in the Post. Ref. column | b. | a check mark under
the column total | c. | the account number under the column total in parentheses | d. | none of the
above |
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12.
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The entry to journalize payment to replenish a petty cash fund is ____.
a. | debit Cash; credit Petty Cash | b. | debit Petty Cash; credit
Cash | c. | debit the appropriate expense and other accounts; credit Cash | d. | debit the
appropriate expense and other accounts; credit Petty Cash |
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13.
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The purchases account is classified as ____.
a. | an expense account | c. | a liability account | b. | an asset account | d. | a cost account |
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14.
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Using a cash register tape as a source document for weekly cash and credit card
sales is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Realization of
Revenue | b. | Objective Evidence | d. | Business Entity |
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15.
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The ledger that contains all accounts needed to prepare financial statements is
the ____.
a. | accounts payable ledger | c. | general ledger | b. | accounts receivable
ledger | d. | subsidiary
ledger |
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16.
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An increase in revenue resulting from a sale on account should be recorded
____.
a. | at the time of the sale | c. | at the end of the fiscal
period | b. | at the end of each month | d. | when the final payment is made |
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17.
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The source document for recording a purchase on account transaction is a
____.
a. | purchase invoice | c. | memorandum | b. | sales invoice | d. | check |
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18.
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A sale on account transaction ____.
a. | increases the balance of the Accounts Payable account | b. | increases the amount
to be collected later from a customer | c. | decreases the amount to be collected later from
a customer | d. | decreases the balance of the Accounts Receivable
account |
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19.
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A journal used to record only one kind of transaction ____.
a. | is a special journal | b. | is a general journal | c. | must be used by all
businesses | d. | increases the time required to journalize
transactions |
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20.
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When a credit is posted to the accounts receivable ledger, ____.
a. | the new amount posted in the Credit column is subtracted from the previous
balance | b. | the source document number and page number of the journal are written in the Post.
Ref. column of the account | c. | the credit amount is written in the Debit
column of the account | d. | Balance is written in the Item
column |
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21.
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A liability account that summarizes the amounts owed to all vendors is titled
____.
a. | Accounts Payable | c. | Sales | b. | Accounts Receivable | d. | Purchases |
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22.
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A subsidiary ledger containing only accounts for vendors from whom items are
purchased or bought on account is ____.
a. | an accounts payable ledger | c. | a general
ledger | b. | an accounts receivable ledger | d. | none of the
above |
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23.
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The totals of the General columns of the cash payments journal are posted to
____.
a. | the accounts payable ledger | c. | the general
ledger | b. | the accounts receivable ledger | d. | none of the
above |
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24.
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A form prepared by the vendor showing the amount deducted for returns and
allowances is called a ____.
a. | credit memorandum | c. | purchase invoice | b. | sales invoice | d. | cash receipt |
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25.
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The journal entry for a cash receipt on account is ____.
a. | debit Cash; credit Accounts Receivable | b. | debit Cash; credit Accounts
Payable | c. | debit Accounts Payable; credit Cash | d. | debit Accounts Payable; credit Accounts
Receivable |
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26.
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Each account in a subsidiary ledger has ____.
a. | two amount columns | c. | four amount columns | b. | three amount columns | d. | none of the
above |
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27.
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Using a sales invoice as a source document for recording a sale on account is an
application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Realization of
Revenue | b. | Objective Evidence | d. | Business Entity |
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28.
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A form prepared by the customer showing the price deduction taken by the
customer for returns and allowances is a ____.
a. | memorandum | c. | purchases allowance | b. | purchase invoice | d. | debit
memorandum |
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29.
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Recording the actual amount paid for merchandise or other items bought is an
application of the accounting concept ____.
a. | Business Entity | c. | Historical Cost | b. | Objective Evidence | d. | Going Concern |
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30.
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The special amount column totals of the cash receipts journal are ____.
a. | posted monthly to a customer account | b. | posted to the general ledger controlling
account at the end of each month | c. | not posted | d. | posted
often |
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31.
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The amount of sales tax a business collects is ____.
a. | an asset | c. | a liability | b. | an expense. | d. | revenue |
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32.
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When cash is received on account, the balance of the ____.
a. | cash account decreases | b. | sales account increases | c. | sales tax payable
account decreases | d. | accounts receivable account
decreases |
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33.
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A sale in which cash is received for the total amount of the sale at the time of
the transaction is a ____.
a. | credit card sale | c. | convenience sale | b. | cash sale | d. | deferred-payment
sale |
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34.
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The total amount of the purchases journal is posted to the general ledger
account(s) ____.
a. | Purchases | c. | Purchases and Accounts Payable | b. | Accounts
Payable | d. | none of the
above |
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35.
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The amount added to the cost of merchandise to establish the selling price is
known as the ____.
a. | trade discount | c. | list price | b. | cash discount | d. | markup |
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36.
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A deduction that a vendor allows on the invoice amount to encourage prompt
payment is called ____.
a. | a cash discount | c. | a markup | b. | terms of sale | d. | a trade
discount |
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37.
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A special journal used to record only sales on account is ____.
a. | a cash journal | c. | a cash receipts journal | b. | a purchases
journal | d. | none of the
above |
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38.
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Sales invoices should be ____.
a. | numbered in sequence | b. | prepared in triplicate | c. | used as source
documents for sales on account | d. | all of these |
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39.
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An agreement between a buyer and a seller about payment for merchandise is the
____.
a. | purchase invoice | c. | sales invoice | b. | correcting entry | d. | terms of sale |
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40.
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A purchases journal is used to journalize ____.
a. | all purchase transactions | b. | all transactions | c. | all purchase of
merchandise on account transactions | d. | adjusting
entries |
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41.
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In a cash sales transaction with sales tax, the ____.
a. | sales tax amount collected is an asset | b. | sales tax amount collected is a
liability | c. | balance of the sales account is decreased | d. | balance of the cash
account is decreased |
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42.
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The entry to journalize a purchase of merchandise on account is ____.
a. | debit Accounts Payable; credit Merchandise | b. | debit Accounts
Payable; credit Purchases | c. | debit Purchases; credit Accounts
Payable | d. | debit Purchases; credit Merchandise |
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43.
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A ledger that is summarized in a single general ledger account is a ____.
a. | ledger | c. | secondary ledger | b. | controlling ledger | d. | subsidiary
ledger |
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44.
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A vendor number is written in the Post. Ref. column of the journal as the last
posting step to ____.
a. | identify the vendor | b. | start a new journal page | c. | show that posting of
this line to the accounts payable ledger is complete | d. | show the general ledger account to which the
total was posted |
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45.
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Each entry in the purchases journal is an amount that ____.
a. | is to be paid to a vendor | c. | is to be collected from a
customer | b. | has been paid to a vendor | d. | none of the above |
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46.
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A business that buys and resells merchandise to retail merchandising businesses
is known as a ____.
a. | vendor | c. | corporation | b. | wholesale merchandising
business | d. | partnership |
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47.
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The retail price listed in a catalog or on an Internet site is called the
____.
a. | list price | c. | full price | b. | markup | d. | trade discount |
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48.
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The amount on each line of a purchases journal is posted as a ____.
a. | debit to an account in the accounts payable ledger | b. | debit to an account
in the accounts receivable ledger | c. | credit to an account in the accounts payable
ledger | d. | credit to an account in the accounts receivable
ledger |
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49.
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Supplies bought for use in a business are recorded in the ____.
a. | supplies expense account | c. | supplies
account | b. | purchases account | d. | cash account |
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50.
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When opening a new page in an accounts receivable ledger, ____.
a. | Balance is written in the Item column | b. | the Item column is left
blank | c. | a number is written in the Post. Ref. column | d. | none of the
above |
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51.
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Daily general ledger account balances are ____.
a. | usually not necessary | b. | necessary to do monthly financial
statements | c. | posted to the accounts receivable ledger daily | d. | needed if the dollar
amounts are large |
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52.
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A schedule of accounts receivable is prepared ____.
a. | before all current entries are posted | b. | after all current entries are
posted | c. | before the special column totals are posted | d. | at the beginning of
the month |
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53.
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A journal amount column headed with an account title is a ____.
a. | general amount column | c. | general credit column | b. | general debit
column | d. | special amount
column |
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54.
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Each entry in the purchases journal is ____.
a. | posted daily | c. | posted at the end of a month | b. | posted
often | d. | none of the
above |
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55.
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A general ledger sorts and summarizes all information affecting ____.
a. | income statement and balance sheet accounts | b. | accounts receivable
accounts | c. | accounts payable accounts | d. | none of the
above |
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56.
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An account in a general ledger that summarizes all accounts in a subsidiary
ledger is ____.
a. | an expense account | c. | a controlling account | b. | a contra
account | d. | a capital
account |
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57.
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A special journal used to record only cash receipt transactions is ____.
a. | a cash journal | c. | a cash receipts journal | b. | a purchases
journal | d. | none of the
above |
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58.
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A form describing goods sold, the quantity, and the price is ____.
a. | a check | c. | an invoice | b. | a receipt | d. | a memorandum |
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59.
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The amount added to the cost of merchandise to establish the selling price is
____.
a. | cost of goods sold | c. | cost of sales | b. | cost of merchandise | d. | markup |
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60.
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When a customer account balance is changed, ____.
a. | the total of all account balances will be less than the balance of the controlling
account | b. | all vendor numbers will change | c. | the balance of the controlling account Accounts
Receivable is also changed | d. | none of the
above |
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61.
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The total of the schedule of accounts receivable should equal ____.
a. | the accounts receivable account balance in the general ledger | b. | the cash
account | c. | the debit and credit proof | d. | none of the
above |
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62.
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A listing of customer accounts, account balances, and total amount due from all
customers is a ____.
a. | schedule of accounts payable | c. | subsidiary
ledger | b. | schedule of accounts receivable | d. | controlling
list |
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63.
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What is the formula for calculating the invoice amount?
a. | Total List Price + Trade Discount = Invoice Amount | b. | Total List Price
- Trade Discount = Invoice Amount | c. | Total List Price
´ Trade Discount = Invoice Amount | d. | Total List Price
¸ Trade Discount = Invoice Amount |
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64.
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Writing an account title in the Account Title column of a journal is not
necessary if the journal has ____.
a. | a Cash Debit column | c. | a Source Doc. column | b. | a Post. Ref. column | d. | special amount
columns |
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65.
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Information to be recorded in the accounts payable ledger is ____.
a. | the date and posting reference information | b. | a debit or credit
amount | c. | the new account balance | d. | all of the
above |
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66.
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The total amount due from all charge customers is summarized in a general ledger
account titled ____.
a. | Accounts Receivable | c. | Revenue | b. | Accounts Payable | d. | Sales |
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67.
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To indicate that column totals are not to be posted, ____.
a. | a check mark is placed in parentheses under the total | b. | a check mark is
placed in the Post. Ref. column of the journal on the total line | c. | nothing is placed
under the total | d. | an account number is placed in the Post. Ref. column of the
journal |
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68.
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A cash payments journal is used to journalize ____.
a. | all cash transactions | c. | adjusting entries | b. | only cash payment
transactions | d. | closing
entries |
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69.
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The entry to journalize buying supplies for cash is ____.
a. | debit Supplies; credit Cash | b. | debit Accounts Payable; credit
Supplies | c. | debit Purchases; credit Cash | d. | debit Purchases; credit
Supplies |
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70.
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The amount of sales tax collected is recorded in a ____.
a. | combined revenue account | c. | separate liability
account | b. | separate ledger | d. | separate revenue account |
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