Chapter 2 Review

Preparing two copies of a sales invoice provides a copy for the customer and a copy for the business to use for journalizing the transaction.

• True

• False

Each departmental sales journal entry is posted individually as a credit to the appropriate customer’s account.

• True

• False

The vendor prepares a debit memorandum for a sales returns and allowances transaction.

• True

• False

A cash discount on a sale taken by the customer is called a sales discount.

• True

• False

Each amount in the Accounts Receivable Credit column of a departmental cash receipts journal is posted when the transaction is recorded in the cash receipts journal.

• True

• False

Each amount in the Cash Debit column of a departmental cash receipts journal is posted individually to the debit side of the Cash account.

• True

• False

Each amount in the Accounts Receivable Debit column of a departmental sales journal is (A) posted as a debit to a customer’s account (B) posted as a credit to a customer’s account (C) posted to a controlling account (D) not posted.

• posted as a debit to a customer’s account

• posted as a credit to a customer’s account

• posted to a controlling account

• not posted

The terms 2/10, n/30 mean (A) a 2% sales discount may be deducted if sales on account are paid within 30 days of the invoice date (B) a 2% sales discount may be deducted if sales on account are paid within 10 days (C) all sales on account must be paid within 30 days (D) B and C.

• a 2% sales discount may be deducted if sales on account are paid within 30 days of the invoice date

• a 2% sales discount may be deducted if sales on account are paid within 10 days

• all sales on account must be paid within 30 days

• B and C

Credit card sales are recorded in the cash receipts journal because (A) the cash is usually deposited in the cash account in two or three days (B) government policy requires immediate payment (C) credit card companies are not included in the accounts receivable ledger (D) this procedure is the first step in collecting from credit card companies.

• the cash is usually deposited in the cash account in two or three days

• government policy requires immediate payment

• credit card companies are not included in the accounts receivable ledger

• this procedure is the first step in collecting from credit card companies

Which journal is used to record the sale of merchandise on account to Tom Jenkins?

• SJ

• CRJ

• GJ

• None of the above