Advanced Accounting Chapter 2 Review

Departmental information can help identify problems in specific departments.

• 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

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

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

• True

• False

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

• True

• False

By recording sales returns and allowances separately, a business can easily determine the proportion of merchandise sold that was returned by customers.

• True

• False

The terminal summary is the source document for both cash sales and credit card sales.

• True

• False

A sales return results in a credit to the customer’s account and the general ledger account, Accounts Receivable.

• True

• False

The column totals of the sales journal are posted to the general ledger only when the journal is filled.

• True

• False

The amount of cash received when a $100.00 sale, plus sales tax of 5%, is collected within the 2/10, n/30 discount period is $98.00.

• True

• False