Questions and Answers
What do you call a person or business to whom merchandise or services are sold?
customer
What is the tax on a sale of merchandise or services called?
sales tax
What is a special journal used to record only sales of merchandise on account?
sales journal
What is a sale in which cash is received for the total amount of the sale at the time of the transaction?
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What is a sale in which a credit card is used for the total amount of the sale at the time of the transaction called?
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What is a computer used to collect, store, and report all the information of a sales transaction called?
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What is the report that summarizes the cash and credit card sales of a point-of-sale terminal?
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What do you call a report of credit card sales produced by a point-of-sale terminal?
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What is the process of preparing a batch report of credit card sales from a point-of-sale terminal called?
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What is a special journal used to record only cash receipt transactions?
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What do you call a cash discount on sales taken by a customer?
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What do you call the credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor's accounts receivable?
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What do you call the credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor's accounts receivable?
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What is a form prepared by the vendor showing the amount deducted for returns and allowances?
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Most states do not require a business to collect sales tax from customers.
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Sales tax rates are usually stated as a percentage of sales.
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A sale of merchandise increases the revenue of a business.
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The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made.
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A sale on account is not the same as a charge sale.
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A credit card sale is a sale in which cash is received for the total amount of the sale at the time of the transaction.
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A cash sale is a sale in which a credit card is used for the total amount of the sale at the time of the transaction.
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At the end of the week, all credit card slips are gathered together, sorted by issuing bank, and mailed individually to each of the banks to collect payment.
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All cash receipts, including cash sales and credit card sales, are recorded in the cash receipts journal.
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The total of a terminal summary can be recorded as a single cash transaction.
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For cash and credit card sales, the asset account Cash is debited for the total of sales and sales tax, but the revenue account Sales is credited only for the total of sales.
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The revenue account Sales has a normal credit balance.
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The liability account Sales Tax Payable has a normal debit balance.
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The source document for cash received on account from a customer is a receipt.
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When cash is received on account, the cash account balance increases and the accounts receivable account balance increases.
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When a sales discount is taken, a customer pays less cash than the invoice amount previously recorded in the sales account.
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The account Sales Discount increases sales.
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Maintaining a separate account for sales discounts provides business managers with information to evaluate whether a sales discount is a cost-effective method.
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If a customer does not pay the amount owed within the sales discount period, the full invoice amount is due.
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After the cash receipts journal is proved at the end of the month, cash is proved.
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All transactions can be recorded in a special journal.
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Credit may be granted to a customer only when merchandise is returned.
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Sales returns and sales allowances increase the amount of sales.
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The account Sales Returns and Allowances is a contra account.
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Study Notes
Key Terms in Accounting
- Customer: Individual or business purchasing merchandise or services.
- Sales Tax: Tax applied to the sale of merchandise or services.
- Sales Journal: Special journal for recording sales of merchandise on account.
- Cash Sale: Transaction where cash is received at the time of sale.
- Credit Card Sale: Transaction completed using a credit card at the time of sale.
Points of Sale and Reporting
- Point-of-Sale Terminal: Computer system for collecting, storing, and reporting sales transaction data.
- Terminal Summary: Report summarizing cash and credit card sales recorded by a point-of-sale terminal.
- Batch Report: Report detailing credit card sales generated from a point-of-sale terminal.
- Batching Out: Process of preparing a batch report for credit card sales from point-of-sale data.
Journals and Discounts
- Cash Receipts Journal: Journal for recording all cash receipt transactions.
- Sales Discount: Cash discount offered to customers on sales.
- Sales Return: Credit given for returned merchandise, decreasing vendor's accounts receivable.
- Sales Allowance: Partial credit to a customer for merchandise not returned, also reducing vendor's accounts receivable.
- Credit Memorandum: Form showing amounts deducted for returns and allowances.
True/False Statements
- Sales tax collection is required in most states.
- Sales tax rates are typically a percentage of sales.
- Recording a sale increases business revenue.
- Revenue realization is confirmed when a sale occurs.
- Sale on account and charge sale refer to the same process.
- Credit card sales do not involve immediate cash receipt.
- Cash receipts journal captures all cash transactions.
- Terminal summary totals can be recorded as a single cash transaction.
- Cash account is debited includes sales tax, but sales revenue recorded separately.
- Sales account maintains a normal credit balance.
- Sales Tax Payable liability account should have a credit balance.
- Receipts serve as source documents for cash received on account.
- Cash received on account increases the cash account but does not affect accounts receivable.
- Sales discount reduces the cash amount received compared to the invoice.
- Sales discounts do not increase the sales account.
- Separate tracking of sales discounts aids in evaluating cost-effectiveness.
- Full amount owed is required if payment is missed within the discount period.
- Cash proving follows the reconciliation of the cash receipts journal.
- Not all transactions qualify for recording in special journals.
- Credit can be extended without returns having taken place.
- Sales returns and allowances reduce overall sales volume.
- Sales Returns and Allowances is considered a contra account.
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Description
Test your knowledge with these flashcards on key terms from Accounting Chapter 10. Each card provides a word and its definition, helping you master important accounting concepts. Perfect for students looking to sharpen their understanding of sales and taxation.
