QUIZ 2 Flashcards
The purchase order is used by a sales department to notify the purchasing department of the
items needed
FALSE
The purchase order is prepared by the purchasing department to order the necessary goods at an
appropriate price from the selected supplier. The PURCHASE REQUISITION is used by a sales
department to notify the purchasing department of the items wanted.
In the double-entry system, all business transactions affect at least two accounts and leave the
accounting equation in balance.
TRUE
A customer’s promise to pay on credit is classified as an Accounts Payable by the seller.
FALSE
A customer’s promise to pay on credit is considered an Accounts Receivable in the books of the
seller.
Business transactions are first recorded in the General Ledger.
FALSE
General Journal
Liability accounts having a normal balance of credit will use the credit side for increases and
the debit side for decreases.
TRUE
A promissory note is a written promise to pay a specified amount on a certain date.
TRUE
A wholesale business is a firm which typically sells goods to another firm – a retailer, which will
then sell it to the final customer.
TRUE
Under a periodic inventory system, the ending inventory is accounted for at the end of the
accounting period
TRUE
Accounts that normal debit balances are
Assets, owner’s drawings, and expenses
Trade discounts are discounts for early payment of account.
FALSE
Trade discounts are discounts for bulk purchases. Cash discounts are discounts for early payment
of account.
Freight costs incurred by the seller on outgoing merchandise are considered to be a Cost of
Sales item to the seller
FALSE
Freight costs by the seller, also known as Freight Out, is considered as an expense
Posting;
A. Normally occurs before journalizing.
B. Is an optional step in the recording process.
C. Transfers journal entries to ledger accounts.
D. Transfers ledger transaction data to the journal
C. Transfers journal entries to ledger accounts
Which of the following errors will result in an equal Trial Balance?;
A. The purchase of delivery truck for ₱450,000 was posted as debit to cash, and a debit to the
motor vehicle account.
B. A payment of account of ₱9,500 is debited to Accounts Payable as ₱9,050.
C. The balance of Accounts Receivable is carried forward as a credit balance.
D. The purchase of supplies on account was journalized twice.
D. The purchase of supplies on account was journalized twice.
An entity collected cash on the note issued by the customer for professional service rendered,
the bookkeeper will
Credit notes receivable
Payment of a liability out of the owner’s personal cash increases and decreases?
Decreases liability and increases equity.
A company paid ₱5,000 to settle an account payable to a supplier where they bought office
supplies last month. Which of the following general journal entries will the company make to
record this transaction?
Debit Accounts Payable, ₱5,000; credit Cash, ₱5,000
A 105-day 5% note was issued with a face value of P10,000 on January 3. The maturity date is
on
April 18
What do the following credit terms mean: 1/10, n/20?
20 days credit terms and with 1% cash discount if paid within 10 days.
This term indicates that the seller pays for freight and retains ownership and assumes loss or
damage until the goods are delivered to the buyer.
FOB Destination Point, Prepaid
What type of transaction is recorded in the sales journal?
Sale of merchandise on account
Collection of the maturity value of a note will increase both total assets and owner’s equity.
true
