When goods are returned that relate to a prior cash sale,

the Cash account will be credited.

A sales invoice is a source document that

provides support for credit sales.

A merchandising company using a perpetual system will make

one more adjusting entry than a service company does.

The journal entry to record a credit sale is

Accounts Receivable(Dr.) Sales Revenue (Cr.)

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

customer can deduct a 2% discount if bill is paid within 10 days of invoice

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Chapter 5 - Quiz 3

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Questions 10

Answers

1
The Sales Returns and Allowances account is classified as a(n)
asset account.
expense account.
contra-asset account.
contra-revenue account.
2
When goods are returned that relate to a prior cash sale,
Accounts Receivable will be credited.
Sales Returns and Allowances will be credited.
the Sales Returns and Allowances account should not be used.
the Cash account will be credited.
3
A sales invoice is a source document that
serves only as a customer receipt.
provides evidence of incurred operating expenses.
provides support for credit sales.
provides support for goods purchased for resale.
4
The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are
debit, credit, debit.
credit, debit, debit.
credit, debit, credit.
credit, credit, credit.
5
As an incentive for customers to pay their accounts promptly, a business may offer its customers
a sales return.
free delivery.
a sales allowance.
a sales discount.
6
When a seller grants credit for returned goods, the account that is credited is
Inventory.
Sales Returns and Allowances.
Accounts Receivable.
Sales Revenue.
7
A merchandising company using a perpetual system will make
one less adjusting entry than a service company does.
one more adjusting entry than a service company does.
the same number of adjusting entries as a service company does.
different types of adjusting entries compared to a service company.
8
The journal entry to record a credit sale is
Cash (Dr.) Sales Revenue (Cr.)
Accounts Receivable(Dr.) Sales Revenue (Cr.)
Cash(Dr.) Service Revenue (Cr.)
Accounts Receivable(Dr.) Service Revenue (Cr.)
9
The credit terms offered to a customer by a business firm are 2/10, n/30, which means that
the customer must pay the bill within 10 days.
customer can deduct a 2% discount if bill is paid within 10 days of invoice
customer can deduct a 2% discount if bill is paid between 10th and 30th day
two sales returns can be made within 10 days of invoice & no returns after
10
In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of
sales discounts.
inventory.
sales revenue.
freight-out.

Chapter 5 - Quiz 3 Flashcards | StudBud