Accounting Final

The purchases account has a _____.

• Normal debit balance

• Normal credit balance

• Normal balance that varies depending on the transaction

• Normal negative balance

The Purchases Discount account _____.

• Increases the amount of purchases

• Decreases the amount of purchases

• Increases the expenses of the company

• Decreases the cash flow

If merchandise is purchased for $1,000 on August 1, with terms of sale of 2/10, n/30, the amount due to the vendor on August 9 is _____.

• $1,000

• $990

• $980

• $20

If a company pays $50 for advertising, the amount $50 is recorded in the General Debit column of the Cash Payments Journal. In addition, the account title “Advertising Expense” must be written in as the account title. Why is it necessary to write the account title when entering an amount in the General Debit column?

How does technology (the automated accounting software we used in class) make journalizing and posting of purchases and cash payments easier, more efficient, and more accurate?

The Sales Returns & Allowances account is used for both sales returns and sales allowances. What is the difference between a return and an allowance?

Hobby Shack is a local retail merchandising business that charges and collects sales tax from its customers. Why is the sales tax collected considered a liability?

Hobby Shack is a local retail merchandising business. How or when would Hobby Shack not collect sales tax from a customer?

Hobby Shack is a local retail merchandising business. The terminal summary report for January 31 shows $300 in cash sales and $100 in credit card sales for the day. When recording this transaction, what action should Hobby Shack take?

• A. The $300 in cash sales should be recorded in the Cash Receipts Journal.

• B. The $100 in credit card sales should be recorded in the Sales Journal.

• C. The total, $400, should be recorded in the Cash Receipts Journal.

• D. The total, $400, should be recorded in the General Journal.

When merchandise is sold on account and sales tax is also collected, ______.