Question 1
The collection on an account within the 1/10 n/30 discount period was recorded using a 10% discount rather than a 1% discount in both the controlling and subsidiary accounts. This error will cause the
A. the net income for the period to be understated.
B. the net income for the period to be overstated.
C. the control account to not agree with the subsidiary ledger.
D. the assets to be overstated.
Question 2
If a credit memorandum is issued, which account will be decreased on the seller's books?
A. Accounts Receivable
B. Accounts Payable
C. Sales Discount
D. Sales Returns and Allowances
Question 3
The principal ledger containing all the balance sheet and income statement accounts is the _______ ledger.
A. general
B. creditors'
C. customers'
D. subsidiary
Question 4
Monica's Closet received payment in full for goods sold within the discount period on a $500 sales invoice, terms 2/10, n/30. Which entry records this payment?
A. Debit Accounts Receivable; credit Sales $500
B. Debit Cash; credit Accounts Receivable $500
C. Debit Cash $490, debit Sales Discount $10; credit Sales $500
D. Debit Cash $490, debit Sales Discount $10; credit Accounts Receivable $500
Question 5
Which statement about subsidiary ledgers is most accurate?
A. The subsidiary ledger accounts will never equal the control account in the general ledger.
B. The Accounts Receivable subsidiary ledger is a book of accounts that provides supporting detail for Accounts Receivable.
C. The subsidiary ledger accounts will equal the amount in the Sales account.
D. All of the above
Question 6
A received payment within the discount period for previously merchandise sold will be recorded with a
A. credit to an asset account.
B. debit to a liability account.
C. debit to Capital.
D. None of the above
Question 7
When using a subsidiary ledger, the Accounts Receivable account in the general ledger is called the _______ account.
A. master
B. subsidiary
C. receivable
D. controlling
Question 8
A collected payment from a credit customer will be recorded with a
A. credit to an asset account.
B. credit to a liability account.
C. credit to Capital.
D. None of the above
Question 9
R&R Lumber reports gross sales of $70,000. If sales returns and allowances are $10,000 and sales discounts are $3,000, what are the net sales?
A. $83,000
B. $63,000
C. $57,000
D. $70,000
Question 10
Payment of $99 for merchandise sold on credit for $100 subject to 1/10 n/30 was received within the discount period. This was recorded with a debit to Sales Discounts for $1, a debit to Cash for $99, and a credit to Accounts Receivable for $100, but no mention was made of the subsidiary ledger account. This error will cause the
A. net income for the period to be overstated.
B. net income for the period to be understated.
C. control account to not agree with the subsidiary ledger.
D. assets to be overstated.
Question 11
Secret Trails received payment in full within the credit period for horse boarding for $900 plus 6% sales tax. Terms of the sale were 2/10, n/30. Which entry is required to record this payment?
A. Debit Cash $900; credit Accounts Receivable Sales $900
B. Debit Cash $936; debit Sales Discount $18; credit Accounts Receivable $954
C. Debit Cash $954; credit Sales $954
D. Debit Cash $936; credit Sales $936