Question 1
Medeco bought goods for $250 on credit. Medeco returned $50 worth of goods. Terms of the sale were 2/10, n/30. If Medeco pays the amount owed within the discount period, what is the amount it should pay?
A. $250
B. $204
C. $196
D. $200
Question 2
A list of creditors with balances owed is called a
A. schedule of accounts receivable.
B. schedule of accounts payable.
C. list of suppliers.
D. trade list.
Question 3
The normal balance for Purchases Returns and Allowances is
A. a debit.
B. a credit.
C. zero.
D. It doesn't have a normal balance.
Question 4
A. O.B. shipping point means
B. the buyer pays for the freight.
C. the seller pays for the freight.
D. the title passes at time of shipment.
E. Both A and C
Question 5
When the term F.O.B. shipping point is used, title passes when the
A. goods reach the halfway point.
B. goods reach the destination.
C. goods are shipped.
D. buyer unpacks the goods.
Question 6
The entry to record a purchase of $5,000 on account, terms of 2/10, n/30, would include a
A. debit to Purchases Discount for $100.
B. credit to Accounts Payable for $5,000.
C. debit to Accounts Payable for $5,000.
D. credit to Cash for $5,000.
Question 7
The entry to record a payment on a $600 account within the 2% discount period would include a
A. debit to Accounts Payable for $588.
B. debit to Accounts Payable for $600.
C. credit to Purchases for $588.
D. debit to Cash for $600.
Question 8
Merchandise paid for within the discount period for a Cash refund was returned. This will be recorded with a
A. credit to a liability.
B. credit to an asset.
C. debit to a liability.
D. debit to an asset.
Question 9
Purchases are a/an
A. cost.
B. asset.
C. liability.
D. revenue.
Question 10
Clothes R Us bought some new clothes for its fashion line and is required to pay the freight costs. The freight terms are
A. F.O.B. destination.
B. F.O.B. shipping point.
C. 3/10, n/30.
D. None of the above
Question 11
Tyler returned $500 worth of merchandise within the discount period. The entry to record the return is which of the following?
A. Debit Purchases for $500; credit Accounts Payable $500
B. Debit Purchases for $500; credit Purchases Returns and Allowances $500
C. Debit Accounts Payable/Suppliers Name for $500; credit Purchases Returns and Allowances for $500
D. Debit to Accounts Payable for $500, credit Purchases Discount for $500
Question 12
On April 30, Miller's Bike Goods purchased $600 of merchandise on account from the Spark Company. The goods were shipped F.O.B. shipping point. The freight charge of $40 was paid by Spark Company and added to the invoice. The amount to record in the Purchases account is
A. $650.
B. $640.
C. $550.
D. $450.
Question 13
Jackson purchased $500 of goods and received credit terms of 2/10, n/30. How much did he pay if payment was made during the discount period?
A. $450
B. $510
C. $500
D. $490
Question 14
When merchandise is bought for resale, which account would be decreased?
A. Store Equipment
B. Purchases
C. Cash
D. Capital
Question 15
On February 12, Clare purchased $400 of merchandise on account from Larsen's Accessories, terms 2/10, n/30. The goods were shipped F.O.B. destination. The freight charge was $40. The amount to be recorded in the Accounts Payable Subsidiary ledger is
A. $392.
B. $408.
C. $400.
D. $440.
Question 16
A debit memorandum increases which account on the buyer's books?
A. Accounts Payable
B. Purchases Returns and Allowances
C. Sales Returns and Allowances
D. Accounts Receivable
Question 17
On November 30, Janoch's Dog Kennel purchased $600 of merchandise on account from the Ganster Company. The goods were shipped F.O.B. shipping point. The freight charge of $40 was paid by Ganster Company and added to the invoice. The amount to record in the Purchases account is
A. $600.
B. $640.
C. $560.
D. $550.
Question 18
Heidi's Accessories bought 50 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the purchase would include a debit to
A. Accounts Payable for $530.
B. Accounts Payable for $500.
C. Purchases for $530.
D. Purchases for $500.
Question 19
The Accounts Payable subsidiary ledger
A. lists accounts alphabetically.
B. lists accounts for which the company owes money.
C. has a controlling account in the general ledger.
D. All of the above
Question 20
If a display rack was purchased for the store, which account would be increased?
A. Store Equipment
B. Purchases
C. Cash
D. Capital