Question Details

Business A 654 CHAPTER 5 PART 6

CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS

81.	The collection of a $1,500 account after the 2 percent discount period will result in a
a.	debit to Cash for $1,470.
b.	debit to Accounts Receivable for $1,500.
c.	debit to Cash for $1,500.
d.	debit to Sales Discounts for $30.


82.	The collection of a $1,000 account after the 2 percent discount period will result in a
a.	debit to Cash for $980.
b.	credit to Accounts Receivable for $1,000.
c.	credit to Cash for $1,000.
d.	debit to Sales Discounts for $20.


	83.	In a perpetual inventory system, the Cost of Goods Sold account is used
a.	only when a cash sale of merchandise occurs.
b.	only when a credit sale of merchandise occurs.
c.	only when a sale of merchandise occurs.
d.	whenever there is a sale of merchandise or a return of merchandise sold.


	84.	Sales revenues are usually considered earned when
a.	cash is received from credit sales.
b.	an order is received.
c.	goods have been transferred from the seller to the buyer.
d.	adjusting entries are made.


	85.	A sales invoice is a source document that
a.	provides support for goods purchased for resale.
b.	provides evidence of incurred operating expenses.
c.	provides evidence of credit sales.
d.	serves only as a customer receipt.


	86.	Sales revenue
a.	may be recorded before cash is collected.
b.	will always equal cash collections in a month.
c.	only results from credit sales.
d.	is only recorded after cash is collected.


	87.	The journal entry to record a credit sale is
a.	Cash
		Sales Revenue
b.	Cash
		Service Revenue
c.	Accounts Receivable
		Service Revenue
d.	Accounts Receivable
		Sales Revenue


 
	88.	Sales Returns and Allowances is increased when
a.	an employee does a good job.
b.	goods are sold on credit.
c.	goods that were sold on credit are returned.
d.	customers refuse to pay their accounts.


	89.	The Sales Returns and Allowances account is classified as a(n)
a.	asset account.
b.	contra asset account.
c.	expense account.
d.	contra revenue account.


	90.	A credit granted to a customer for returned goods requires a debit to
a.	Sales Revenue and a credit to Cash.
b.	Sales Returns and Allowances and a credit to Accounts Receivable.
c.	Accounts Receivable and a credit to a contra-revenue account.
d.	Cash and a credit to Sales Returns and Allowances.


	91.	If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales
a.	discount.
b.	return.
c.	contra asset.
d.	allowance.


	92.	A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18.  What amount is received as payment in full on July 24?
a.	$3,332
b.	$3,440
c.	$3,528
d	$3,600



	93.	When goods are returned that relate to a prior cash sale,
a.	the Sales Returns and Allowances account should not be used.
b.	the cash account will be credited.
c.	Sales Returns and Allowances will be credited.
d.	Accounts Receivable will be credited.


	94.	The Sales Returns and Allowances account does not provide information to management about
a.	possible inferior merchandise.
b.	the percentage of credit sales versus cash sales.
c.	inefficiencies in filling orders.
d.	errors in overbilling customers.


	95.	A Sales Returns and Allowances account is not debited if a customer
a.	returns defective merchandise.
b.	receives a credit for merchandise of inferior quality.
c.	utilizes a prompt payment incentive.
d.	returns goods that are not in accordance with specifications.


	96.	As an incentive for customers to pay their accounts promptly, a business may offer its customers
a.	a sales discount.
b.	free delivery.
c.	a sales allowance.
d.	a sales return.


	97.	The credit terms offered to a customer by a business firm are 2/10, n/30, which means that
a.	the customer must pay the bill within 10 days.
b.	the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date.
c.	the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.
d.	two sales returns can be made within 10 days of the invoice date and no returns thereafter.


	98.	A sales discount does not
a.	provide the purchaser with a cash saving.
b.	reduce the amount of cash received from a credit sale.
c.	increase a contra-revenue account.
d.	increase an operating expense account.


	99.	Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?
a.	$1,750
b.	$2,000
c.	$2,250
d.	$2,450

	100.	Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
a.	$6,272
b.	$6,400
c.	$7,840
d.	$7,872