Deck 6: Supplement: Accounting for Merchandising Operations

Question 1

On April 12,Vancouver Company accepted a return of $200 of merchandise purchased on account.This transaction will result in

A)a $200 credit to the controlling account,Accounts Receivable,and a $200 credit to the individual account in the subsidiary ledger.
B)the subsidiary ledger total being $200 less than the controlling account total.
C)a $200 debit to the subsidiary ledger and a $200 credit to the controlling account,Accounts Receivable.
D)the subsidiary ledger total being $200 more than the controlling account total.

Answer 1

A

Question 2

When a company uses an accounts receivable subsidiary ledger,

A)it need not maintain an Accounts Receivable account in the general ledger.
B)credit sales transactions must be posted to the individual customers' accounts monthly.
C)when the amounts in the subsidiary ledger and the controlling account do not match,the accountant must find the error and correct it.
D)All of these choices.

Answer 2

C

Question 3

Adjusting and closing entries regarding purchases and sales are recorded in the purchases journal and the sales journal,respectively.

Answer 3

False

Question 4

Transactions involving payments of cash for merchandise are recorded in the cash payments journal.

Question 5

When special-purpose journals are used,which of the following is an entry that would be recorded in the general journal rather than in a special journal?

A)Sale of merchandise on account.
B)Cash purchase of merchandise for resale.
C)A return of merchandise bought on account.
D)Cash receipt from a customer for payment on their account.

Question 6

On April 12,Vancouver Company returned of $500 of merchandise it purchased on account from Rupert Co.This transaction will result in

A)a $500 debit to the controlling account,Accounts Payable,and a $500 debit to the individual account in the subsidiary ledger.
B)the subsidiary ledger total being $500 less than the controlling account total.
C)a $500 debit to the subsidiary ledger and a $500 credit to the controlling account,Accounts Payable.
D)the subsidiary ledger total being $500 more than the controlling account total.

Question 7

The purchases journal is used to record only purchases made on credit.

Question 8

When a company uses an accounts receivable subsidiary ledger,it cannot also maintain an Accounts Receivable account in the general ledger.

Question 9

When special journals are used,the general journal is used to record

A)purchase returns.
B)sales of merchandise on credit.
C)receipts of cash.
D)purchases on credit.

Question 10

The cash payments journal would normally post a

A)debit to Cash.
B)credit to Purchases Discounts.
C)credit to Accounts Payable.
D)credit to Advertising Expense.

Question 11

Which of the following transactions would be recorded in a multicolumn purchases journal?

A)Credit purchase of supplies.
B)Credit purchase of equipment.
C)Credit purchase of merchandise for resale to customers.
D)All of these choices.

Question 12

The purchases journal

A)must have several columns,it cannot be a single-column journal.
B)will include all purchases of merchandise for resale.
C)has Accounts Receivable as its controlling account.
D)requires that individual transactions in the Accounts Payable column be posted daily.

Question 13

If management wants specific information on individual items,a subsidiary ledger can be used for Notes Receivable and Equipment.

Question 14

The sales journal is used to handle all cash and credit sales.

Question 15

The cash receipts journal

A)must have several columns,it cannot be a single-column journal.
B)requires that the "Other Accounts" column total be posted daily and at the end of the month.
C)can result in both debits and credits to cash,depending on the transaction.
D)All of these choices.

Question 16

All transactions involving receipts of cash are recorded in the cash receipts journal.

Question 17

When a single-column purchases journal is used,

A)only credit purchases of merchandise for resale to customers are recorded.
B)credit purchases of items other than merchandise are recorded in the general journal.
C)cash purchases of merchandise for resale to customers are recorded in the cash payments journal.
D)All of these choices.

Question 18

Special purpose journals promote

A)economy and control.
B)faithful representation and relevance.
C)relevance and timeliness.
D)going concern and periodicity.

Question 19

The sales journal

A)is designed to handle all cash and credit sales.
B)requires that account names be written out for each debit and credit.
C)requires a brief explanation for each transaction.
D)requires that only one amount,total credit sales for the month,be posted.

Question 20

The total of the balances in the subsidiary ledger accounts equals the balance in the corresponding controlling account.

Question 21

Describe at least 3 ways the sales journal saves time.

Question 22

Which of the following accounts would be credited in the cash payments journal?

A)Purchases Discounts.
B)Accounts Payable.
C)Salary Expense.
D)Rent Expense.

Question 23

Special-purpose journals can promote efficiency,economy,and control.Describe how special-purpose journals promote control,and how they promote efficiency and economy.

Question 24

Which of the following statements about controlling accounts and subsidiary ledgers is incorrect?

A)A subsidiary ledger is a ledger separate from the general ledger.
B)A controlling account is an account in the subsidiary ledger.
C)A controlling account maintains the total of the individual account balances in a subsidiary ledger.
D)A subsidiary ledger contains a group of related accounts,such as a list of customers.

Question 25

Special-purpose journals

A)can be an important part of establishing good internal control.
B)require posting each debit and each credit for each transaction.
C)can be used to record over 99% of most business transactions.
D)include the sales journal and the adjusting entries journal.