Accounting for Purchases and Cash 9-1

A service business sells goods to consumers for a profit.

• True

• False

A retail merchandising business buys products from manufacturers or wholesalers and sells them to individual customers.

• True

• False

A wholesale merchandising business sells goods directly to final consumers.

• True

• False

A sole proprietorship is a type of business that has multiple owners who share profits and losses.

• True

• False

A corporation is a business owned by shareholders and is legally separate from its owners.

• True

• False

The subsidiary ledger contains detailed information that supports a controlling account in the general ledger.

• True

• False

The controlling account is a summary account that shows the total balance of all accounts in a subsidiary ledger.

• True

• False

A subsidiary ledger is always used in place of a controlling account in the general ledger.

• True

• False

The purpose of accounting systems is to provide organized financial information for decision-making and reporting.

• True

• False

A conceptual framework in financial reporting helps ensure consistency, reliability, and comparability in accounting practices.

• True

• False