Question 1

True or False: Unlike a proprietorship, a corporation exists independent of its owners

Accepted Answer

True

Question 2

True or False: A corporation can incur liabilities but cannot own property

Accepted Answer

False

Question 3

True or False: As in proprietorship, information in a corporation\'s accounting system is kept separate from the personal records of the owners, and this account concept application is called a Business Entity

Accepted Answer

True

Question 4

True or False: The selling price of merchandise must be greater than the cost of merchandise for a business to make a profit

Accepted Answer

True

Question 5

True or False: The cost account Purchases is used only to record the value of merchandise purchased

Accepted Answer

True

Question 6

True or False: When purchases are recorded at their cost, including any related shipping costs and taxes, the Historical Cost accounting concept is being applied

Accepted Answer

True

Question 7

True or False: Recording entries in a journal with special amount columns saves time

Accepted Answer

True

Question 8

True or False: All purchase transactions, including purchases made on account and purchases made for cash, are recorded in the purchases journal

Accepted Answer

False

Question 9

True or False: The course document for recording a purchase on account transaction is a memorandum describing the merchandise purchased

Accepted Answer

False

Question 10

True or False: By listing the quantity, the description, the price of each item, and the total amount purchased, the Objective Evidence concept is applied

Accepted Answer

True

Question 11

True or False: A purchase invoice usually lists only the total cost of the merchandise

Accepted Answer

False

Question 12

True or False: A purchase on account transaction increases the amount owed to a vendor

Accepted Answer

True

Question 13

True or False: A cash payment journal includes a special amount account for the cash account and the accounts payable account

Accepted Answer

True

Question 14

True or False: The source document for the most cash payments is the check issued

Accepted Answer

True

Question 15

True or False: When supplies are purchased for use in the business, the amount is recorded purchases account

Accepted Answer

False

Question 16

True or False: A special journal entry is made to show the amount of a trade discount

Accepted Answer

False

Question 17

True or False: A term of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid within 15 days of the invoice date or the total invoice amount must be paid within 30 days

Accepted Answer

True

Question 18

True or False: Purchase discounts are recorded in the general journal

Accepted Answer

False

Question 19

True or False: the contra account Purchases Discount has a normal credit balance

Accepted Answer

True

Question 20

True or False: The custodian prepares a petty cash report when the petty cash fund is to be replenished

Accepted Answer

True

Question 21

True or False: The petty cash account cash Short and Over is a permanent account

Accepted Answer

False

Question 22

True or False: A journal is proved and ruled only at the end of a fiscal period

Accepted Answer

False

Question 23

True or False: To begin a new journal page, the totals from the previous journal page are carried forward to the next journal page

Accepted Answer

True

Question 24

True or False: Buying supplies on account is recorded in the general journal

Accepted Answer

True

Question 25

True or False: When store supplies are purchased on account, the Store Supplies account balance increases and the Accounts Payable account balance increases

Accepted Answer

True

Question 26

True or False: The source document for purchases return is a check

Accepted Answer

False

Question 27

True or False: The normal account balance of Purchases Returns and Allowances is a credit

Accepted Answer

True

Question 28

True or False: The purchases account is increased by a credit and decreased by a debit

Accepted Answer

False

Question 29

True or False: When several journals are used, an abbreviation is used in the Post. Ref. column of a ledger o show the journal from which the posting is made

Accepted Answer

True

Question 30

True or False: Trade discounts normally are recorded in the purchases discount account

Accepted Answer

False

Question 31

True or False: Purchases Discount is increased by a credit entity

Accepted Answer

True

Question 32

True or False: If the actual petty cash on hand is $53.00 but the records show that $55.00 should be on hand, the petty cash fund is said to be over

Accepted Answer

False

Question 33

True or False: Purchases Returns and Allowances is a contra account to Cost of Merchandise

Accepted Answer

False

Question 34

True or False: The terms of sale 1/10, n/30 mean that the customer may deduct 1% of the invoice amount if payment is made within 30 days of the invoice date

Accepted Answer

False

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