Name: Class: Date: - Chapter 1 Recording Departmental Purchases and ...

Name: Class: Date: Chapter 1 Recording Departmental Purchases and Cash Payments Copyright Cengage Learning. Poweredby Cognero.Page 1 True / False 1.Individual amounts in the Accounts Payable Credit column of the purchases journal are posted often to the appropriate vendor accounts.

• True
• False

ANSWER: True

2.The accounting concepts used to record and report financial information are determined by the size, type, and complexity of the business.

• True
• False

ANSWER: False

3.The check number is placed in the Post. Ref. column of the cash payments journal during the posting process.

• True
• False

ANSWER: False

4.In a departmental accounting system, a notation is placed on each purchase invoice indicating the department to which the purchase applies.

• True
• False

ANSWER: True

5.Most businesses record purchase returns and allowances in the Purchases Returns and Allowances column of the purchases journal.

• True
• False

ANSWER: False

6.The vendor number is placed in the Post. Ref. column of the purchases journal as the last step of the posting process.

• True
• False

ANSWER: True

7.To encourage early payment, a seller may offer a cash discount, which allows a deduction from the invoice amount.

• True
• False

ANSWER: True

8.The column totals of a special journal are only posted at the end of the month.

• True
• False

ANSWER: False

Century 21 Accounting, Advanced, 11e Claudia Bienias Gilbertson, Mark Lehman, Daniel Passalacqua (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

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Chapter 1 Recording Departmental Purchases and Cash Payments

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• In a departmental accounting system, there will be an accounts payable account for each department.
• True
• False

ANSWER: False

• When merchandise is returned, the vendor usually give credit to the buyer.
• True
• False

ANSWER: True

• Amounts from the Accounts Payable Debit column of a cash payments journal are posted to the accounts payable

ledger when the transaction is entered in the journal.

• True
• False

ANSWER: True

• An account showing deductions from a purchases account is a contra purchases account.
• True
• False

ANSWER: True

• The only type of entries recorded in a cash payments journal are cash payments for merchandise purchases.
• True
• False

ANSWER: False

• A purchase discount reduces the amount of cash that must be paid for a purchase.
• True
• False

ANSWER: True

• Purchase invoices are the source documents for purchases on account.
• True
• False

ANSWER: True

• When a cash discount is taken after a purchase return or allowance has been granted, the discount is calculated using

the original amount of the invoice.

• True
• False

ANSWER: False

• All departmental purchases of merchandise on account are recorded in a purchases journal.
• True
• False 2 / 4

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ANSWER: True

• Vendor accounts are maintained in a vendors payable ledger.
• True
• False

ANSWER: False

• To replenish petty cash, a check is written for the amount spent from the fund.
• True
• False

ANSWER: True

• Proving the purchases journal means that all amount columns are totaled and double lines are placed across

the amount columns to indicate that the totaling process is complete.

• True
• False

ANSWER: False

• When posting a merchandise purchase in a purchases journal, enter the vendor's invoice number in the

Purch. No. column.

• True
• False

ANSWER: False

• The totals of the general columns of a cash payments journal should be posted to the general ledger when

the journal is full or at the end of a month.

• True
• False

ANSWER: False

Multiple Choice

• An amount owed by a business is called a(n)
• asset
• equity
• liability
• credit

ANSWER: c

• The recording of debit and credit parts of a transaction is called
• the accounting equation
• posting
• double-entry accounting
• processing 3 / 4

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ANSWER: c

• A group of accounts is called a
• ledger
• special journal
• journal
• none of these

ANSWER: a

• Transferring information from a journal entry to a ledger account is called
• ordering
• recording
• posting
• none of these

ANSWER: c

• A journal used to record only one kind of transaction is called a
• ledger
• special journal
• source document
• none of these

ANSWER: b

• A form prepared by the customer showing a price deduction for purchases returns and allowances is called a
• debit memorandum
• credit memorandum
• controlling account
• sales invoice

ANSWER: a

• The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current is

called

• accounting
• double-entry accounting
• controlling accounting
• none of these

ANSWER: d

• An equation showing the relationship among assets, liabilities, and owners’ equity is called the
• accounting equation
• financial equation
• journal equation
• none of these

ANSWER: a

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