Accounting Chapter 9

A corporation can own property, incur liabilities, and enter into contracts in its own name.

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A special journal used to record only purchases of merchandise on account is called a purchases journal.

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• False

A cash payments journal includes a special amount column for the cash account and the accounts payable account.

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The source document for most cash payments is the check issued.

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A special journal entry is made to show the amount of a trade discount.

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A reduction in the list price granted to customers is called a trade discount.

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The terms 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.

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The contra account Purchases Discount has a normal debit balance.

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A journal is proved and ruled only at the end of a fiscal period.

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All vendors offer purchases discounts.

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