Chapter 9 Accounting for Purchases and Cash Accounts-T/F

A corporation can incur liabilities but cannot own property. (p. 24)

• True
• False

The articles of incorporation typically include the name and address of the business, its purpose for operating, any limitations on its activities and rules for dissolving the corporation. (p. 244)

• True
• False

Unlike a proprietorship, a corporation exists independent of its owners. (p. 245)

• True
• False

The total of accounts in the accounts payable ledger equals the balance of the controlling account, Accounts Payable. (p. 246)

• True
• False

The accounts payable ledger form contains the same columns as the general ledger except that it lacks a Credit Balance column. (p. 247)

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• False

When a perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory

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• False

The perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory. (p. 249

• True
• False

The income statement of a merchandising business places Purchases in a section titled Cost of Goods Sold, separate from other expenses. (p. 250)

• True
• False

A purchase invoice lists the quantity, the description, and the price of each item and shows the total amount of the purchase. (p. 253)

• True
• False

A transaction to record merchandise purchased with a trade discount would include a credit to Merchandise Discount. (p. 260)

• True
• False