1. Net purchases are:
A) Purchases + Purchases Returns and Allowances.
B) Purchases – Purchases Discount – Purchases Returns and Allowances.
C) Purchases – Freight – Purchases Returns and Allowances.
D) Purchases + Freight-In.
2. Purchases is a(n):
3. A cost account is treated the same as:
A) a liability.
C) a revenue.
D) an expense.
4. Jackie’s Online Service on April 30 has the following account balances:
Sales returns and allowances 2,000
Purchases Returns and allow. 2,000
Purchases Discounts 1,400
Net purchases for the period are:
5. A characteristic of Purchases Returns and Allowances is:
A) it has a normal credit balance.
B) it increases when merchandise is returned.
C) it decreases cost.
D) All of these are correct.
6. 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) 2/10, n/30.
D) None of these are correct.
7. When the term F.O.B. shipping point is used, title passes:
A) when goods reach the halfway point.
B) when goods reach the destination.
C) when goods are shipped.
D) when the buyer unpacks the goods.
8. On November 30, Janoch’s Dog Kennel purchased $500 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:
9. The entry to record a purchase of $2,000 on account, terms of 2/10, n/30, would include a:
A) debit to Purchases Discount for $40.
B) credit to Accounts Payable for $2,000.
C) debit to Accounts Payable for $2,000.
D) credit to Cash for $2,000.
10. Purchased office supplies on account. This will be recorded with:
A) a debit to Accounts Payable and a credit to Supplies.
B) a debit to Supplies and a credit to Supplies Expense.
C) a debit to Supplies and a credit to Accounts Payable.
D) a credit to Supplies and a debit to Purchases.
11. Heidi’s Accessories bought 40 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the purchase would include:
A) a debit to Accounts Payable for $424.00.
B) a debit to Accounts Payable for $400.00.
C) a debit to Purchases for $424.00.
D) a debit to Purchases for $400.00.
12. On February 12, Clare purchased $350 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:
13. A debit memorandum decreases which account on the buyer’s books?
A) Accounts Payable
B) Purchases Returns and Allowances
C) Sales Returns and Allowances
D) Accounts Receivable
14. The entry to record returned merchandise to Vans Company is:
A) debit Purchases Returns and Allowances; credit Accounts Payable in the general ledger.
B) debit Accounts Payable; credit Purchases.
C) debit Accounts Payable/Vans Company in the accounts payable subsidiary ledger and debit Accounts Payable in the general ledger; credit Purchases Returns and Allowances.
D) debit Purchases; credit Accounts Payable.
15. Heidi’s Accessories bought 40 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the return would include:
A) a debit to Accounts Payable for $50.00.
B) a debit to Accounts Payable for $53.00.
C) a debit to Purchases Returns and Allowances for $50.00.
D) a debit to Purchases Returns and Allowances for $53.00.
16. Jackson purchased $400 of goods and received credit terms of 2/10, n/30. How much did he pay if payment was made during the discount period?
17. Medeco bought goods for $150 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 they should pay?
18. Using the perpetual inventory system, the purchase of merchandise on account would include a:
A) debit to Merchandise Inventory and a credit to Accounts Payable.
B) debit to Accounts Payable and a credit to Merchandise Inventory.
C) debit to Accounts Receivable and a credit to Sales.
D) debit to Sales and a credit to Accounts Receivable.
19. The return of merchandise to the supplier for credit using the perpetual inventory system would include a:
A) debit to Accounts Receivable and a credit to Accounts Payable.
B) debit to Accounts Payable and a credit to Merchandise Inventory.
C) debit to Merchandise Inventory and a credit to Accounts Payable.
D) debit to Accounts Payable and a credit to Purchases Returns and Allowances.
20. The account used in perpetual inventory to record the cost of inventory used to make the sale is:
B) Purchases Returns and Allowances.
C) Purchases Discounts.
D) Cost of Goods Sold.
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