Advanced Accounting Chapter 2 Review

Departmental information can help identify problems in specific departments.

• True

• False

In a cash receipts journal, sales and sales returns and allowances are recorded by department.

• True

• False

Frequent postings are made from the customers’ accounts to the general journal in order to keep the customers’ accounts up to date.

• True

• False

The form prepared by the vendor showing the amount deducted for returns and allowances is known as a credit memorandum.

• True

• False

Each amount recorded in the Accounts Receivable Credit column of the cash receipts journal is posted to the appropriate customer account in the accounts receivable ledger.

• True

• False

To have complete departmental data, purchases, sales, cash receipts, and cash payments must be analyzed by department.

• True

• False

The sales journal has three credit columns: (1) Sales Discount, (2) Sales, and (3) Sales Tax Payable.

• True

• False

When amounts are posted from the sales journal to the customers’ accounts, the customer number is recorded in the Post. Ref. column of the sales journal.

• True

• False

In states that have a sales tax, businesses include a Sales Tax Payable Credit column in the sales journal.

• True

• False

The Realization of Revenue accounting concept explains why businesses record departmental sales at the time of sale, regardless of when payment is made.

• True

• False