Accounting Chapter 9

A corporation can incur liabilities but cannot own property

• True

• False

Unlike a proprietorship, a corporation exists independent of its owners

• True

• False

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

• True

• False

When a perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory.

• True

• False

When a periodic inventory system is used, the cost of merchandise is recorded to Purchases.

• True

• False

The income statement of a merchandising business places Purchases in a section titled Cost of Goods Sold, separate from other expenses.

• True

• False

When journalizing a cash payment for advertising, the vendor's name is written in the Account Title column of the cash payments journal.

• True

• False

When supplies are purchased for use in the business, the amount is recorded as a debit to Purchases

• True

• False

The terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted in paid with 15 days of the invoice date or the total invoice amount must be paid within 30 days.

• True

• False

The contra account Purchases Discount has a normal credit balance

• True

• False