Financial Accounting Chapter 7 Answers – Flashcards

A firm that sells goods that it purchases for re-sale is a A) service business. B) merchandising business. C) manufacturing business. D) non-profit business.

The Sales Returns and Allowances account is classified as A) an asset account. B) an expense account C) a revenue account D) a contra revenue account

At the end of the month, after the equality of the debits and credits recorded in the sales journal is proved by comparing the column totals, the summary posting from the sales journal would include a A) debit to Accounts Receivable, a credit to Sales Tax Payable, and a credit to Sales. B) debit to Cash and a credit to Sales. C) debit to Cash, a credit to Sales Tax Payable, and a credit to Sales. D) debit to Sales Tax Payable, a debit to Sales, and a credit to Accounts Receivable.

Detailed information about the transactions with credit customers and the balances owed by such customers is provided by A) the general journal. B) the sales journal. C) the general ledger. D) an accounts receivable ledger.

If special journals are in use, sales returns and allowances from credit customers may be entered in the A) general journal. B) cash receipts journal. C) sales journal. D) general ledger.

After all postings have been made, the total of the schedule of accounts receivable should equal A) the balance of the Accounts Receivable account in the general ledger. B) the total of Cash in the general ledger. C) the total of all sales on account for the accounting period. D) the total amount collected during the accounting period

The schedule of accounts receivable is prepared from the A) general journal. B) sales journal. C) general ledger. D) accounts receivable subsidiary ledger.

Suppose the list price of goods is $1,000 and the trade discount is 20 percent. What is the amount of the discount and what is the net price to be recorded in the sales journal? A) $20; $1,000 B) $200; $800 C) $200; $1,000 D) $800; $200

Merchandise is sold on credit for $500 plus 6 percent sales tax. The entry in the general journal will include a debit to Accounts Receivable for A) $530.00. B) $506.00 C) $503.00 D) $500.00

When a sales tax return is prepared, the amount of a firm's taxable gross sales for the month are computed as A) Cash sales plus Credit sales less Sales returns and allowances. B) Credit sales less Sales returns and allowances from credit customers. C) Cash sales plus Credit sales. D) Cash sales plus Credit sales plus Sales returns and allowances.