Notes payable is always classified as a current liabilities

• true
• false

A control account such as accounts payable is supported by detailed information in subsidiary ledgers

• true
• false

Transactions are recorded in the cash receipts journal based on

a. Check voucher

b. Purchase invoice

c. Sales invoice

d. Official receipt

When a merchandise is returned by a customer, the customer issues a

a. Debit memorandum

b. Credit memorandum

c. Delivery receipt

d. Promissory note

In the financial statements, the Note Payable account balance is reported at a promissory note's

a. Interest amount

b. Face value

c. Fair market value

d.Maturity value

For a merchandising company using a periodic inventory system, the journal entry to record purchase of ballpens to be used by the company accountant will MOST LIKELY affect the company's

a. Distribution or selling expenses

b. General and administrative expenses

c. Any of these choices, depending on accountant's discretion

d. Cost of sales

For a business using special journals, which of the following current month's transactions will NOT be recorded in the cash payments journal?

a. Giving a cash advance to employees

b. Advance payment of next month's rental fee

c. Payment of last month's utility bills

d. Incurrence of current month's utility bills

In the company's books, which of the following will most likely NOT require an adjusting entry related to a prepaid expense?

a. Supplies still on hand in the company office

b. A three-year premium on fire insurance policy paid by the company

c. Subscription received in advance by the company

d. A one-year advertising contract paid by the company

If the company sold goods costing 82,000 for 123,000 on account, then which of the following statements is CORRECT?

a. The net sales amount on this sale is 41,000.

b. Total cash received from this sale is 41,000.

c. The gross profit on this sale is 41,000.

d. Total assets increase by 41,000 due to this sale.

The company accountant debited Office Supplies rather than Office Equipment by mistake. The debit was posted to the Office Equipment account in the general ledger. What is the journal entry to correct the mistake?

a. None. Journal entry is not necessary because the mistake had been corrected in the ledger.

b. A debit to Office Supplies and a credit to Office Equipment

c. A debit to Office Equipment and a credit to Cash

d. A debit to Office Equipment and a credit to Office Supplies

The company paid insurance premium for 120,000 on April 1 of the current year and debited the same to Prepaid Insurance. On December 31, year-end, the company prepared an adjusting entry crediting Prepaid Insurance for 45,000. Which of the following statements is CORRECT?

a. The entire insurance amount is good for nine months.

b. The annual insurance expense is 45,000.

c. The unexpired insurance as of the current year-end is 45,000.

d. The expired insurance for the current year is 45,000.

At year-end, the company debited Supplies Expense for 5,450 and credited Supplies also for 5,450 in its books. This journal entry MOST LIKELY means that the company

a. Had used supplies worth 5,450

b. Still has unused supplies worth 5,450

c. Had bought supplies worth less than 5,450

d. Had bought supplies worth 5,450

For a merchandising business using special journals, the purchase of merchandise will be recorded in the purchases journal at the list price less any

a.Trade discount, returns and allowances, and partial payment of account

b.Returns and allowances

c.Trade discount

d.Trade discount, and returns and allowances

A company which uses special journals collected cash from a credit customer. This transaction is recorded in the cash receipts journal

a.Only if the collection happened in the same period as the related sale

b.Only if the cash received represents full collection of account within the discount period

c.Only if the cash received represents full collection, and not partial collection, of account

d.Regardless of whether the cash received represents partial or full collection of account

Which of the following statements relating to a merchandising business using a periodic inventory system is CORRECT?

a. The Purchases account is updated for every purchase of merchandise.

b. The Purchase Returns and Allowances is updated for every sale of merchandise.

c. The Merchandise Inventory account is updated for every purchase of merchandise.

d. The Merchandise Inventory account is updated for every sale of merchandise.