Accounting Quiz

Sales tax collected by a business represents a liability until they are paid.

• True

• False

Cash discounts are offered by a business to encourage customers to pay promptly.

• True

• False

The revenue account for a merchandising business is usually called Sales.

• True

• False

The increase side of the account Sales Discounts is a credit.

• True

• False

The Sales Returns and Allowances account is important to a business because it shows the amount of credit granted to dissatisfied customers.

• True

• False

The balance side of any contra account is always on the same side of the balance side of the account it decreases.

• True

• False

The Purchases account is increased by debits.

• True

• False

Every purchase on account results in a debit to Accounts Payable.

• True

• False

The Purchases account is used only to record the purchases of merchandise for resale.

• True

• False

Accounts in the accounts payable subsidiary ledger have normal debit balances.

• True

• False