Chapter 10: Accounting for Sales and Cash Receipts

Question 1

Sale on account: $1000, sales tax: $80; what amount is recorded as a DR to Accounts Receivable?

Accepted Answer

$1080

Question 2

The balance of Accounts Receivable should equal the total of the schedule of AR

Accepted Answer

True

Question 3

The amount of sales tax on a sale is calculated as the price of goods

Accepted Answer

times the sales tax rate.

Question 4

May 23: $1000 sale on account, June 6: payment received. When and where is the sale recorded?

Accepted Answer

Sales journal on May 23

Question 5

Only the federal government can exempt some types of merchandise from sales taxes

Accepted Answer

False

Question 6

The amount of sales tax collected is a liability of a business until paid to the government

Accepted Answer

True

Question 7

Sales Tax Payable has a normal credit balance

Accepted Answer

True

Question 8

A batch report is a detailed report of cash sales during a specific period of time

Accepted Answer

False

Question 9

When merchandise is sold on account and sales tax is also collected:

Accepted Answer

AR balance is increased

Question 10

Regardless of when payment is received, the revenue should be recorded when a sale is made

Accepted Answer

True

Question 11

The total of each general amount column of a journal is posted to a general ledger account

Accepted Answer

False

Question 12

A business should post sales on account transactions to the AR subsidiary ledger frequently to

Accepted Answer

ensure customer account balances are up-to-date

Question 13

A terminal summary is also known as a Z tape

Accepted Answer

True

Question 14

Separate transactions are recorded for cash and credit/debit card totals on a terminal summary

Accepted Answer

False

Question 15

Sale on account: $1100, payment received for 2% discount; what is the cash amount received?

Accepted Answer

$1078

Question 16

Credit terms of 2/10, n/30 mean that if the account is paid in

Accepted Answer

10 days, a 2% discount will be allowed.

Question 17

The total of credit/debit card sales is recorded as a Cash DR since the business gets cash

Accepted Answer

False

Question 18

Most businesses receive cash for credit and debit card sales

Accepted Answer

within 2–3 days after batching out.

Questions 18