Chapter 10 Review

Purchases and sales of merchandise are the two major activities of a merchandising business.  

• True
• False 

The amount of sales tax collected is an asset of the business until paid to the state government.

• True
• False 

Cash is proved when the total of the cash debit column of a cash receipts journal equals the next unused check stub.

• True
• False 

When cash is received for a sale on account within the discount period, the amount credited to Accounts Receivable is reduced by the amount of discount. 

• True
• False 

When a customer is granted credit for merchandise returned, Accounts Receivable is debited.

• True
• False 

A terminal summary reports total cash and credit card sales of a point-of-sale terminal.  

• True
• False 

Regardless of when merchandise is sold, revenue should be recorded when cash is received.

• True
• False 

Because Sales Discount is a contra account to sales, it has a normal credit balance.

• True
• False 

Point of sale terminals use UPC symbols to obtain the description and price of merchandise sold.  

• True
• False 

Received cash on account from Harbor, Inc, $210,000 would be recorded in what journal

• General
• Sales
• Cash Receipts