Accounting Chapter 15

Front

The purchases account is increased by a credit and decreased by a debit.

Back

False

Front

The Purchases account is only used to record the sale of merchandise on account.

Back

False

Front

Prepaid Insurance is classified as an asset account.

Back

True

Front

Purchases Returns and Allowances is a contra account to Cost of Merchandise.

Back

False

Front

Purchases Discount is increased by a credit entry.

Back

True

Front

The Transportation In account is classified as a cost of merchandise account.

Back

True

Front

The terms of sale 1/10, n/30 mean that the customer may deduct 1% of the invoice amount if payment is made within 30 days of the invoice date.

Back

False

Front

Purchases returns and allowances

Back

decrease the amount of purchases

Front

Merchandise with a list price of $1,500.00 is purchased on account on August 1. Terms of sale are 2/10,n/30. Payment is made on August 17. The amount paid should be

Back

$1,500.00

Front

A business receives a(n) ____________ when it keeps unsatisfactory merchandise, but pays less than the original price.

Back

Purchase Allowance