Accounting - Chapter 10 Study Guide

Sales invoices should be 

• numbered in sequence
• prepared in triplicate
• used as source document for sales on account
• all of these

Sales Returns and Allowances is

• an expense account
• a contra revenue account
• a revenue account
• a contra expense account

Cash is proved when the total of the Cash Debit column of a cash receipts journal equals the next unused check stub

• True
• False

A terminal summary reports total cash and credit card sales of a point-of-sale terminal

• True
• False

The amount of sales tax collected is an asset of the business until paid to the state government

• True
• False

A credit memorandum is the form prepared by the vendor showing the amount deducted for returns and allowances

• True
• False

A special journal used to record only sales of merchandise on account is the 

• Purchases Journal
• Sales Journal
• Cash Receipts Journal
• Cash Payments Journal

Regardless of when merchandise is sold, revenue should be recorded when cash is received

• True
• False

Sales discount is a contra account to Sales, therefore has a normal credit balance

• True
• False

The amount of sales tax on a sale is calculated as the price of goods

• plus the sales tax rate
• minus the sales tax rate
• times the sales tax rate
• divided by the sales tax rate