Accounting Ch 9 Quiz

What is the purpose of accounting for purchases?

• To calculate profit

• To track and record expenses related to acquiring goods or services for the business.

• To track personal expenses

• To manage employee schedules

Explain the difference between a purchase order and an invoice.

• A purchase order and an invoice are the same thing.

• A purchase order is issued by the buyer to the seller, while an invoice is issued by the seller to the buyer.

• A purchase order is only used for online purchases, while an invoice is used for in-store purchases.

• A purchase order is issued by the seller to the buyer, while an invoice is issued by the buyer to the seller.

What is the journal entry to record a purchase on account?

• Debit Purchases, Credit Accounts Payable

• Debit Cash, Credit Accounts Receivable

• Debit Accounts Payable, Credit Purchases

• Debit Inventory, Credit Cash

How does a purchase discount affect the cost of inventory?

• It reduces the cost of inventory.

• It only affects the selling price of inventory.

• It has no effect on the cost of inventory.

• It increases the cost of inventory.

What is the journal entry to record the payment of accounts payable?

• Debit inventory, credit accounts payable

• Debit cash, credit accounts payable

• Debit accounts payable, credit cash

• Debit accounts receivable, credit cash

Explain the concept of cash discounts on purchases.

• Discounts offered by suppliers to encourage late payment

• Discounts offered by suppliers to discourage prompt payment

• Discounts offered by suppliers to encourage overpayment

• Discounts offered by suppliers to encourage prompt payment

What is the effect of a purchase return on the accounting equation?

• Decreases the assets and increases the liabilities, leading to an increase in the total equity

• Increases both the assets and the liabilities, leading to an increase in the total equity

• Has no effect on the accounting equation

• Decreases both the assets and the liabilities, leading to a decrease in the total equity

How does the perpetual inventory system differ from the periodic inventory system?

• No difference between the two systems

• Perpetual inventory system only applies to certain industries

• Updating inventory records once a year

• Continuous updating of inventory records

What are the advantages of using the perpetual inventory system?

• Manual tracking of inventory levels and costs, lack of control over inventory management, and delayed decision-making.

• Real-time tracking of inventory levels and costs, better control over inventory management, and timely decision-making.

Explain the concept of petty cash and its role in cash payments.

• Petty cash is a large amount of cash kept on hand for major expenses.

• Petty cash is a type of credit card.

• Petty cash is used only for online payments.

• Petty cash is a small amount of cash kept on hand for minor expenses. Its role is to facilitate small, day-to-day cash payments without the need for writing a check or using a credit card.