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1
The Purchases account is used to record the buying of office supplies to be used in the business.
A)True
B)False
2
The shipping cost of goods purchased is debited to the Transportation-In account of the buyer.
A)True
B)False
3
Transactions for purchases returns and allowances affecting accounts payable are recorded in the general journal.
A)True
B)False
4
A debit to Accounts Payable for a return of goods on account must be posted to the controlling account and the individual account.
A)True
B)False
5
With FOB destination, the seller maintains ownership of the goods until the goods are delivered.
A)True
B)False
6
The terms 2/10, n/40 means that the buyer can take a 2% discount if they pay within 40 days.
A)True
B)False
7
If we return $200 of goods which we bought for resale and the goods were originally purchased on account, the journal entry would include a debit to the Accounts Payable account.
A)True
B)False
8
The Purchase Discounts account is a contra-revenue account
A)True
B)False
9
The Purchases account normally has a debit balance
A)True
B)False
10
If we purchase $200 of goods on account, the journal entry would include a debit to the Accounts Payable account.
A)True
B)False
11
If we purchase $200 of goods on account with terms of 1/10, n/45, the journal entry when we PAY for the goods within the discount period would include a debit to the Accounts Payable account.
A)True
B)False
12
The Purchases Returns and Allowances account normally has a debit balance
A)True
B)False
13
If we purchase $200 of goods on account with terms of 1/10, n/45, the journal entry when we PAY for the goods within the discount period would include a credit to the Purchase Discounts account.
A)True
B)False
14
If we purchase $200 of goods on account with terms of 1/10, n/45, but return ½ of it because of defects, when we pay for the remaining goods still within the discount period, the discount amount is $2.
A)True
B)False
15
With FOB shipping point, the seller maintains ownership of the goods until the goods are delivered.
A)True
B)False
16
When a buyer returns or takes an allowance on merchandise, the buyer issues what document to inform the seller of a debit made to the seller's account in the buyer's records
A)debit memorandum.
B)credit memorandum.
C)sales invoice.
D)purchase invoice.
E)none of these.
17
From the viewpoint of the buyer, a discount taken on goods purchased should be recorded in the
A)Purchases account.
B)Purchase Discounts account.
C)Sales Discounts account.
D)Merchandise Inventory account.
E)none of these.
18
Freight charges may be
A)listed separately on the invoice.
B)included in the price of the goods on the invoice.
C)billed separately from the invoice.
D)all of these.
E)none of these.
19
The account used to record transportation costs of goods purchased for resale is
A)Purchases.
B)Transportation In.
C)Transportation Out.
D)Freight Out.
E)none of these.
20
The source for preparing the schedule of accounts payable is
A)the purchase invoices.
B)the Accounts Payable controlling account.
C)the Accounts Payable Subsidiary ledger.
D)the purchases journal.
E)none of these.
21
Cho Company bought goods from Lay Company with shipping terms FOB destination. Which of the following statements correctly identifies who is to pay the freight bill when the title is transferred?
A)Lay pays transportation, and title is exchanged when goods are unloaded at Cho Company.
B)Lay pays transportation, and title is exchanged when goods are unloaded at Lay Company.
C)The manufacturer pays the freight, thus the term FOB (free on board).
D)Cho pays transportation, and title is exchanged when goods are loaded at Lay Company.
E)none of these
22
Tesor bought goods from Kogle Company. The next day, Tesor returned the goods because they had a defect. Tesor Company would record this as
A)a sales return.
B)a purchase discount.
C)a sales discount.
D)a purchase return.
E)none of these.
23
When goods previously purchased on account are returned for credit, the journal entry is
A)debit Purchases Returns and Allowances and credit Accounts Payable.
B)debit Accounts Payable and credit Purchases Returns and Allowances.
C)debit Purchases and credit Purchases Returns and Allowances.
D)debit Accounts Receivable and credit Purchases Returns and Allowances.
E)none of these.
24
The discount on an invoice for $590 dated July 20 and paid July 29 with terms 2/10, n/30 is
A)$578.20.
B)$5.90.
C)zero.
D)$11.80.
E)none of these.
25
The amount due on an $835 invoice dated March 12, a $25 return, terms 2/10, n/30, paid March 18 is
A)$16.70.
B)$818.30.
C)$16.20.
D)$793.80.
E)none of these.
26
The discount on an invoice for $500 dated July 12 and paid July 29 with terms 2/10, n/30 is
A)$50.
B)$10.
C)zero.
D)$100.
E)none of these.
27
On March 12, a purchase of goods for resale was made for $835 with terms 2/10, n/30. The goods were paid for on March 18. The journal entry to record the purchase on March 12 would include a:
A)credit to Accounts Receivable
B)debit to Accounts Payable
C)debit to Purchases
D)credit to Cash.
E)none of these.
28
On March 12, a purchase of goods for resale was made for $835 with terms 2/10, n/30. The goods were paid for on March 18. The journal entry to record the payment within the discount period would include a:
A)credit to Purchase Discounts
B)credit to Accounts Payable
C)debit to Purchases Discounts
D)debit to Cash.
E)none of these.
29
Which of the following accounts are used to compute net purchases.
A)Purchases, Accounts Payable and Transportation In
B)Purchases, Purchase Discounts, Purchase Returns and Allowances and Transportation In.
C)Purchases, Sales Discounts, Sales Discounts and Allowances and Transportation In.
D)Purchases, Sales Discounts, Merchandise Inventory and Transportation In
E)none of these are correct.
30
The journal entry to record the payment of goods which originally cost $100 on account, with terms of 2/10, n/30 which is paid for within the discount period would include a
A)debit to Accounts Payable of $98.
B)debit to Cash of $98.
C)credit to Accounts Payable of $100.
D)debit to Accounts Payable of $100.
E)none of these.





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