9) Credit terms of 2/10, n/30 indicate that a 2% discount may be taken if the invoice is paid within 10 days, but the total invoice amount is due if paid on the 11th through the 30th day after the invoice date.
10) What is a purchase return?
A) A return of merchandise that is defective or damaged
B) A customer refund from the sale of inventory
C) A price reduction
D) A return of cash to the purchaser
11) A purchase return of goods purchased on credit is recorded by the purchasing company as a debit to what account?
A) Accounts receivable
B) Inventory
C) Cost of goods sold
D) Accounts payable
12) What is freight out?
A) Transportation costs to ship goods into the warehouse
B) Inventory costs
C) Costs that are not expensed
D) Transportation costs to ship goods out of the warehouse
13) What is freight in?
A) Transportation costs to ship goods into the warehouse
B) Transportation costs that are not recorded
C) Costs that are expensed
D) Transportation costs to ship goods out of the warehouse
14) In the credit terms of 2/10, n/30, what does the 2/10 mean?
A) The invoice must be paid in 2 days or a 10% late charge will be assessed.
B) The invoice was printed 2 days after the sale and is due in 10 days.
C) The goods shipped took 2 days to arrive and the charge was $10.00.
D) The purchaser may take a 2% discount if the invoice is paid in 10 days.
15) A company uses the perpetual inventory method. Which of the following entries would be made to record a purchase of inventory on account?
A) The accounting entry would be a debit to Purchases and a credit to Accounts payable.
B) The accounting entry would be a debit to Accounts payable and a credit to Purchases.
C) The accounting entry would be a debit to Inventory and a credit to Accounts payable.
D) The accounting entry would be a debit to Accounts payable and a credit to Inventory.
16) A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10, net/30. Which of the following entries would be made to record the payment if it is made within 10 days?
A) $1,000 debit to Accounts payable and a $1,000 credit to Cash
B) $1,000 debit to Accounts payable, a $20 credit to Inventory and a $980 credit to Cash
C) $20 debit to Inventory, a $1,000 debit to Accounts payable and a $1,020 credit to Cash
D) $980 debit to Accounts payable, a $20 debit to Inventory and a $1,000 credit to Cash
17) A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10, net/30. Which of the following entries would be made to record the payment if it is made 20 days later?
A) $1,000 debit to Accounts payable and a $1,000 credit to Cash
B) $1,000 debit to Accounts payable, a $20 credit to Inventory and a $980 credit to Cash
C) $20 debit to Inventory, a $1,000 debit to Accounts payable and a $1,020 credit to Cash
D) $980 debit to Accounts payable, a $20 debit to Inventory and a $1,000 credit to Cash
18) If a company, using a perpetual inventory system, purchases inventory on account, and later returns $200 of goods to the vendor, what entry would be made to record the return of goods to the vendor?
A) $200 debit to Purchases and a $200 credit to Accounts payable
B) $200 debit to Accounts payable and a $200 credit to Inventory
C) $200 debit to Inventory and a $200 credit to Accounts payable
D) $200 debit to Accounts payable and a $200 credit to Purchases