Chapter 9: Accounting for Purchases and Cash Payments

A transaction to record merchandise purchased with a trade discount would include a debit to Merchandise Discount

• True

• False

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

• True

• False

The terms of sale 1/10, n/30 means that 1/10 or 10% of the invoice amount may be deducted if paid within 30 days.

• True

• False

The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, Accounts Payable

• True

• False

Classify the account Purchases

Classify the account Purchases Discount

The periodic inventory method does not require records of the quantity and cost of individual goods.

• True

• False

A purchase of merchandise for cash would be posted

• individually to Purchases and individually to Accounts Payable

• individually to Purchases

• as part of a column total to Purchases

• as part of column totals to Purchases and Accounts Payable

Merchandise with a list price of $1,500.00 is purchased on account for $900.00 on August 1. Terms of sale are 2/10, n/30. Payment is made on August 17. The amount paid should be

• $1,500.00

• $600.00

• $900.00

• $882.00

Supplies bought for use in a business are recorded in the

• Supplies Expense account

• Supplies account

• Purchases account

• Cash account