Unit 32-Practice Quiz

Which of the following is a term used when a credit sale is returned by the customer?

• credit limit

• sales allowance

• sales return

• invoice

Which of the following terms defines when a customer buys a good or service on credit and agrees to pay at a later date?

• Subsidiary ledger

• operating activities

• Accounts receivable

• Direct write- off approach

Which of the following transactions would take place in the journal when a customer buys a good or service on credit?

• Sales account is debited; cash account is credited

• Accounts receivable account is debited; cash account is credited

• Accounts receivable account is debited; sales return account is credited

• Accounts receivable account is debited; sales account is credited

Which of the following terms describes a financial statement which shows how the balance sheet and income statement changes affect the flow of cash?

• Income statement

• Invoice statement

• Balance Statement

• Cash Flow Statement

Which of the following is a report which lists all amounts owed by customers?

• Schedule of accounts payable

• Schedule of accounts receivable

• Schedule of allowances

• Schedule of bad debts

Which of the following is a balance sheet account which reduces the reported amount of accounts receivable?

• Allowance for doubtful accounts

• Allowance for tax credits

• Schedule of bad debts

• Schedule of accounts receivable

Which of the following transactions would take place when an account becomes uncollectible and is written off under the allowance method?

• Bad debts account is debited; accounts receivable is credited

• Accounts receivable account is debited; sales return account is credited

• Accounts receivable account is debited; an allowance for doubtful accounts is credited

• Allowance of doubtful accounts is debited; accounts receivable is credited

The journal entry for recording accounts receivable is:

• Dr. Sales; Cr. Accounts Receivable

• Dr. Accounts Receivable: Cr. Sales

• Dr. Cash; Cr. Sales

• Dr. Sales; Cr. Accounts Payable

The payment terms 2/10, n/30 tell us that:

• a 10% discount will be awarded if the payment is made within 2 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.

• a 2% discount will be awarded if the payment is made within 10 months of invoice date; otherwise, the full amount is payable within 30 months of invoice date.

• a 2% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.

• a 0.5% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.

The cash discount (also known as purchase discount or sale discount) is given to customers for:

• early payments

• bulk purchase

• frequent purchases

• good business relations