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5. The journal entry to record a return of merchandise purchased on account under a perpetual...

5. The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

           a. Accounts Payable.

           b. Purchase Returns and Allowances.

           c.   Sales.

           d. Merchandise Inventory.

6. Freight costs incurred by a seller on outgoing merchandise are debited to

           a. the Cost of Goods Sold account.

           b. the Sales Revenue account.

           c.   an operating expense account.

           d. the Sales Returns and Allowances account.

7. If goods in transit are shipped FOB destination

           a. the seller has legal title to the goods until they are delivered.

           b. the buyer has legal title to the goods when a public carrier accepts the goods from the seller.

           c.   the transportation company has legal title to the goods while the goods are in transit.

           d. no one has legal title to the goods until they are delivered.

8. Having one person receive all cash and a different person post to the Accounts Receivable account in the general ledger is an example of

           a. inadequate internal control.

           b. duplication of effort.

           c.   external verification.

           d. segregation of duties.

9. Which one of the following is not an objective of a system of internal controls?

           a. Safeguard company assets

           b. Overstate liabilities in order to be conservative

           c.   Enhance the accuracy and reliability of accounting records

           d. Reduce the risks of errors

10 A petty cash fund of $100 is replenished when the fund contains $5 in cash and receipts for $93. The entry to replenish the fund would include a

           a. credit to Cash Over and Short for $2.

           b. credit to Miscellaneous Revenue for $2.

           c.   debit to Cash Over and Short for $2.

           d. debit to Miscellaneous Expense for $2.

Business   Accounting   
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Homework Answers

Answer #1

5.d.merchandise inventory

The entry to record return of merchandise that is purchased on account under the system of perpetual inventory is:

Accounts payable A/C dr

To merchandise inventory

6.c.an operating expense account

Freight costs which are incurred by the seller on an outgoing merchandise are debited to operating expense(freight out )account and cash is credited.

7.a.seller has legal title to goods until delivered

In case the goods in transit are shipped FOB destination it would mean that the transportation costs are paid by the seller and the seller would hold title on these goods until delivered to the buyer.

8.d.segregation of duties

For the purpose of eliminating frauds it is best that no one person should be assigned many duties.Having one person to collect cash and other person to post the accounts receivables entry in the ledger is one such example.

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