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Accounting

Terms in this set (20)

A corporation can incur liabilities but cannot own property.
False
The articles of incorporation typically include the name and address of the business, its purpose for operating, any limitations on its activities, and rules for dissolving the corporation.
True
Unlike a proprietorship, a corporation exists independent of its owners.
True
The total of accounts in the accounts payable ledger equals the balance of the controlling account, Accounts Payable.
True
The accounts payable ledger form contains the same columns as the general ledger except that it lacks a Credit Balance column
False
When a perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory.
True
The perpetual inventory method is easier to maintain than the periodic method. The perpetual method does not require records of the quantity and cost of individual goods.
False
When a periodic inventory system is used, the cost of merchandise is recorded to Purchases.
True
The income statement of a merchandising business places Purchases in a section titled Cost of Goods Sold, separate from other expenses.
True
A purchase invoice lists the quantity, the description, and the price of each item and shows the total amount of the purchase.
True
A transaction to record merchandise purchased with a trade discount would include a credit to Merchandise Discount.
False
When journalizing a cash payment for advertising, the vendor's name is written in the Account Title column of the cash payments journal.
False
When supplies are purchased for use in the business, the amount is recorded as a debit to Purchases.
False
The terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid within 15 days of the invoice date or the total invoice amount must be paid within 30 days.
True
The contra account Purchases Discount has a normal credit balance
True
The petty cash account Cash Short and Over is a permanent account.
False
Exceeding a vendor's credit limit can cause a disruption in the company's ability to purchase merchandise.
True
A journal is proved and ruled whenever a journal page is filled, and always at the end of a month.
True
The totals of the General amount columns of a cash payments journal are posted to the general ledger.
False
The total of an accounts payable trial balance should equal the total of Accounts Payable.
True
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