Question 1

What is a corporation?

Accepted Answer

An organization which many persons may own.

Answer

The total shares of ownership in a corporation.

Answer

An owner of one or more shares of a corporation.

Answer

A transaction in which the merchandise purchased is to be paid for later.

Question 2

What does the term 'markup' refer to?

Accepted Answer

The amount added to the cost of merchandise to establish the selling price.

Answer

A deduction that a vendor allows on the invoice amount.

Answer

A special journal used to record only cash payment transactions.

Answer

The retail price listed in a catalog or on an Internet site.

Question 3

What is a cash discount?

Accepted Answer

A deduction that a vendor allows on the invoice amount to encourage prompt payment.

Answer

An agreement between a buyer and a seller about payment terms.

Answer

A special journal used to record cash transactions.

Answer

A form prepared by the customer showing price deductions for returns.

Question 4

What is a purchase on account?

Accepted Answer

A transaction in which the merchandise purchased is to be paid for later.

Answer

Total shares of ownership in a corporation.

Answer

A special amount column in a cash payments journal.

Answer

An invoice used as a source document for recording a purchase.

Question 5

What is the purpose of a purchases journal?

Accepted Answer

A special journal used to record only cash payment transactions.

Answer

To record detailed information about sales.

Answer

To summarize all transactions over a month.

Answer

To list all transactions regardless of type.

Question 6

What does the term 'contra account' mean?

Accepted Answer

An account that reduces a related account on a financial statement.

Answer

A liability account that cannot hold a balance.

Answer

A type of journal for sales transactions.

Answer

An account used for recording cash transactions only.

Question 7

What does 'terms of sale' indicate?

Accepted Answer

An agreement between a buyer and a seller about payment terms.

Answer

The total cost of merchandise.

Answer

The price a business pays for goods it purchases.

Answer

The process for recording cash payments.

Question 8

What is a debit memorandum?

Accepted Answer

A form prepared by the customer showing the price deduction taken by the customer for returns and allowances.

Answer

A type of invoice for cash purchases.

Answer

A source document for recording cash transactions.

Answer

An agreement to purchase on account.

Question 9

What does a purchase allowance refer to?

Accepted Answer

Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable.

Answer

The price a business pays for goods.

Answer

A form of cash payment.

Answer

A reduction in the list price granted to customers.

Question 10

What is a 'vendor'?

Accepted Answer

A business from which merchandise is purchased.

Answer

A person who holds shares in a corporation.

Answer

A special journal for cash payments.

Answer

An organization that issues stock.

Question 11

What is the term for a reduction in the list price granted to customers?

Accepted Answer

trade discount

Answer

purchases return

Answer

purchase allowance

Answer

cash payments journal

Question 12

Which statement is true about a corporation?

Accepted Answer

Unlike a proprietorship, a corporation exists independent of its owners.

Answer

Corporations must be owned by one individual.

Answer

A corporation cannot incur liabilities.

Answer

All corporations are non-profit.

Question 13

Why is it important to regularly check for cash short and cash over situations in a business?

Accepted Answer

To ensure accurate financial records and prevent losses.

Answer

To make more sales.

Answer

To avoid paying taxes.

Answer

To confuse the employees.

Question 14

What is the primary purpose of reconciling cash at the end of a shift?

Accepted Answer

To verify that the cash matches sales records.

Answer

To calculate employee bonuses.

Answer

To check the functionality of the cash register.

Answer

To collect tips from customers.

Question 15

True or False: The custodian prepares a petty cash report when the petty cash fund is to be replenished.

Accepted Answer

True

Answer

Maybe

Answer

False

Answer

Not Sure

Question 16

True or False: The petty cash amount should be fixed and not exceed a certain limit set by the organization.

Accepted Answer

True

Answer

Unlimited

Answer

False

Answer

Variable

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