Sales Transactions and Reporting Quiz

Questions and Answers

What is a batch report?

A report of credit card sales produced by a point-of-sale terminal.

What does batching out refer to?

The process of preparing a batch report of credit card sales from a point-of-sale terminal.

What is a cash receipts journal?

A special journal used to record only cash receipt transactions.

What is a cash sale?

A sale in which cash is received for the total amount of the sale at the time of the transaction. Signup and view all the answers

What characterizes a credit card sale?

A sale in which a credit card is used for the total amount of the sale at the time of the transaction. Signup and view all the answers

What is a credit memorandum?

A form prepared by the vendor showing the amount deducted for returns and allowances. Signup and view all the answers

Define customer in a sales context.

A person or business to whom merchandise or services are sold. Signup and view all the answers

What is a point-of-sale (POS) terminal?

A computer used to collect, store, and report all the information of a sales transaction. Signup and view all the answers

What is a sales allowance?

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. Signup and view all the answers

What is a sales discount?

A cash discount on sales taken by a customer. Signup and view all the answers

What is a sales journal?

A special journal used to record only sales of merchandise on account. Signup and view all the answers

What is a sales return?

Credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor's accounts receivable. Signup and view all the answers

What is sales tax?

A tax on a sale of merchandise or services. Signup and view all the answers

What is a terminal summary?

The report that summarizes the cash and credit card sales of a point-of-sale terminal. Signup and view all the answers

Most states do not require a business to collect sales tax from customers.

False Signup and view all the answers

Sales tax rates are usually stated as a percentage of sales.

True Signup and view all the answers

A sale of merchandise increases the revenue of a business.

True Signup and view all the answers

The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made.

True Signup and view all the answers

A sale on account is not the same as a charge sale.

False Signup and view all the answers

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.

False Signup and view all the answers

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.

False Signup and view all the answers

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 payments.

False Signup and view all the answers

All cash receipts, including cash sales and credit card sales, are recorded in the cash receipts journal.

True Signup and view all the answers

The total of a terminal summary can be recorded as a single cash sales transaction.

True Signup and view all the answers

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.

True Signup and view all the answers

The revenue account Sales has a normal credit balance.

True Signup and view all the answers

The liability account Sales Tax Payable has a normal debit balance.

False Signup and view all the answers

The source document for cash received on account from a customer is a receipt.

True Signup and view all the answers

When cash is received on account, the cash account balance increases and the accounts receivable account balance increases.

False Signup and view all the answers

When a sales discount is taken, a customer pays less cash than the invoice amount previously recorded in the sales account.

True Signup and view all the answers

The account Sales Discount increases sales.

False Signup and view all the answers

Maintaining a separate account for sales discounts provides business managers with information to evaluate whether a sales discount is a cost-effective method.

True Signup and view all the answers

If a customer does not pay the amount owed within the sales discount period, the full invoice amount is due.

True Signup and view all the answers

After the cash receipts journal is proved at the end of the month, cash is proved.

True Signup and view all the answers

All transactions can be recorded in a special journal.

False Signup and view all the answers

Credit may be granted to a customer only when merchandise is returned.

False Signup and view all the answers

Sales returns and sales allowances increase the amount of sales.

False Signup and view all the answers

The account Sales Returns and Allowances is a contra account.

True Signup and view all the answers

Sales for cash and credit cards are recorded as a single cash sales transaction.

False Signup and view all the answers

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

False Signup and view all the answers

When cash is proved, it must always equal the amount on the next unused check stub.

True Signup and view all the answers

For weekly 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.

True Signup and view all the answers

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

False Signup and view all the answers

Even though a company offers a sales discount, the customer is invoiced for the full sales amount plus sales tax on that amount.

True Signup and view all the answers

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

False Signup and view all the answers

All sales of merchandise are recorded in a sales journal.

False Signup and view all the answers

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

False Signup and view all the answers

What journal would the sale of merchandise on account to Henning, Inc., for $650.00 be recorded in?

Sales Journal Signup and view all the answers

What journal is used for recording cash received on account from Braxton Co., for $987.00?

Cash Receipts Journal Signup and view all the answers

What journal records the sale of merchandise on account to Braxton Co., for $1,650.00?

Sales Journal Signup and view all the answers

What journal would you use to grant credit to Henning, Inc., for merchandise returned, totaling $90.00?

General Journal Signup and view all the answers

What journal captures cash received on account from Braxton Co., for $1,746.36?

Cash Receipts Journal Signup and view all the answers

What journal records the sale of merchandise on account to Central University, $815.00?

Sales Journal Signup and view all the answers

What journal records cash received on account from Henning, Inc., totaling $604.80?

Cash Receipt Journal Signup and view all the answers

What journal is used for recording cash and credit card sales for the week of $4,500.00?

Cash Receipt Journal Signup and view all the answers

Recording revenue from transactions at the time goods or services are sold is an application of the accounting concept:

Realization of Revenue Signup and view all the answers

Using a terminal summary as a source document for weekly cash and credit card sales is an application of the accounting concept:

Objective Evidence Signup and view all the answers

When merchandise is sold on account and sales tax is also collected,

the accounts receivable account balance is increased. Signup and view all the answers

Sales Returns and Allowances is:

a contra revenue account. Signup and view all the answers

Credit terms of 2/10, n/30 mean that if the account is paid in:

10 days, a 2% discount will be allowed. Signup and view all the answers

The amount of cash received for a sale on account of $1,000.00 plus sales tax of $80.00 when the cash is received within the 2 percent discount period is:

$1,058.40. Signup and view all the answers

The amount of sales tax on a sale is calculated as the price of goods:

times the sales tax rate. Signup and view all the answers

For a sale on account of $1,000.00 plus sales tax of $80.00 when the cash is recorded in the Accounts Receivable amount column of a sales journal is:

$1,080.00. Signup and view all the answers

Study Notes

Batch Reporting and Sales Transactions

Batch Report: Compiles credit card sales from a point-of-sale (POS) terminal.
Batching Out: The preparation of batch reports for credit card transactions.
Point-of-Sale Terminal: Computer that manages sales transaction data.

Cash Transactions

Cash Receipts Journal: A specific journal dedicated to cash receipt transactions.
Cash Sale: Immediate cash payment received for a transaction.
Credit Card Sale: Transaction where the purchase amount is charged to a credit card.

Sales Adjustments

Credit Memorandum: Document detailing adjustments in sales for returns and allowances.
Sales Allowance: Partial credit given to a customer for merchandise not returned, decreasing accounts receivable.
Sales Return: Credit issued for returned merchandise, also decreasing accounts receivable.

Sales and Tax Concepts

Sales Tax: Additional tax imposed on the sale of goods or services, typically expressed as a percentage of the sale.
Sales Discount: Reduction in sales price offered to customers.
Terminal Summary: Report summarizing cash and credit card sales at the end of a transaction period.

Revenue Recognition

Realization of Revenue: Revenue is recognized at the time of sale in accordance with accounting principles.
Sales Revenue: Increased revenue accounts when sales occur.

Journal Entries

Sales Journal: Used exclusively for recording merchandise sales on credit.
General Journal: Used for various transactions not recorded in special journals.
Cash Receipts Journal: Records all cash received, including cash and credit card sales.

Accounting Principles

Contra Revenue Account: Account like Sales Returns and Allowances decreases total revenue.
Normal Balance: Accounts like Sales have a normal credit balance, while Sales Tax Payable has a normal credit balance.

Credit Terms and Discounts

Credit Terms (2/10, n/30): 2% discount if paid within 10 days; full amount due in 30 days.
Sales Transactions and Discounts: Cash payments recorded after deducting applicable discounts within discount periods.

Common Misconceptions

Cash and Credit Card Sales: Misunderstandings often arise regarding the nature of cash and credit card sales in accounting.
Sales Tax as Asset: Amount collected as sales tax is a liability, not an asset until remitted to the government.
Sales Returns and Discounts: Sales returns and allowances do not increase total sales; instead, they decrease it.

Calculation and Reporting

Sales Tax Calculation: Determined by multiplying the price of goods by the sales tax rate.
Accounts Receivable: Credited for total sales and sales tax when a sale occurs on account.

Important Operations

Receipts from Sales on Account: Need to properly record cash received for accounts on a timely basis to maintain accurate account balances.
Document Use: Terminal summaries are effectively used as source documents for cash and credit card sales, ensuring proper tracking of revenue.

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Description

Test your knowledge on batch reporting, cash transactions, and sales adjustments including credit memorandum and sales tax concepts. This quiz covers fundamental aspects of sales documentation and accounting practices.

Sales Transactions and Reporting Quiz

Questions and Answers

What is a batch report?

What does batching out refer to?

What is a cash receipts journal?

What is a cash sale?

What characterizes a credit card sale?

What is a credit memorandum?

Define customer in a sales context.

What is a point-of-sale (POS) terminal?

What is a sales allowance?

What is a sales discount?

What is a sales journal?

What is a sales return?

What is sales tax?

What is a terminal summary?

Most states do not require a business to collect sales tax from customers.

Sales tax rates are usually stated as a percentage of sales.

A sale of merchandise increases the revenue of a business.

The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made.

A sale on account is not the same as a charge sale.

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.

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.

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 payments.

All cash receipts, including cash sales and credit card sales, are recorded in the cash receipts journal.

The total of a terminal summary can be recorded as a single cash sales transaction.

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.

The revenue account Sales has a normal credit balance.

The liability account Sales Tax Payable has a normal debit balance.

The source document for cash received on account from a customer is a receipt.

When cash is received on account, the cash account balance increases and the accounts receivable account balance increases.

When a sales discount is taken, a customer pays less cash than the invoice amount previously recorded in the sales account.

The account Sales Discount increases sales.

Maintaining a separate account for sales discounts provides business managers with information to evaluate whether a sales discount is a cost-effective method.

If a customer does not pay the amount owed within the sales discount period, the full invoice amount is due.

After the cash receipts journal is proved at the end of the month, cash is proved.

All transactions can be recorded in a special journal.

Credit may be granted to a customer only when merchandise is returned.

Sales returns and sales allowances increase the amount of sales.

The account Sales Returns and Allowances is a contra account.

Sales for cash and credit cards are recorded as a single cash sales transaction.

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

When cash is proved, it must always equal the amount on the next unused check stub.

For weekly 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.

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

Even though a company offers a sales discount, the customer is invoiced for the full sales amount plus sales tax on that amount.

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

All sales of merchandise are recorded in a sales journal.

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

What journal would the sale of merchandise on account to Henning, Inc., for $650.00 be recorded in?

What journal is used for recording cash received on account from Braxton Co., for $987.00?

What journal records the sale of merchandise on account to Braxton Co., for $1,650.00?

What journal would you use to grant credit to Henning, Inc., for merchandise returned, totaling $90.00?

What journal captures cash received on account from Braxton Co., for $1,746.36?

What journal records the sale of merchandise on account to Central University, $815.00?

What journal records cash received on account from Henning, Inc., totaling $604.80?

What journal is used for recording cash and credit card sales for the week of $4,500.00?

Recording revenue from transactions at the time goods or services are sold is an application of the accounting concept:

Using a terminal summary as a source document for weekly cash and credit card sales is an application of the accounting concept:

When merchandise is sold on account and sales tax is also collected,

Sales Returns and Allowances is:

Credit terms of 2/10, n/30 mean that if the account is paid in:

The amount of cash received for a sale on account of $1,000.00 plus sales tax of $80.00 when the cash is received within the 2 percent discount period is:

The amount of sales tax on a sale is calculated as the price of goods:

For a sale on account of $1,000.00 plus sales tax of $80.00 when the cash is recorded in the Accounts Receivable amount column of a sales journal is:

Study Notes

Batch Reporting and Sales Transactions

Cash Transactions

Sales Adjustments

Sales and Tax Concepts

Revenue Recognition

Journal Entries

Accounting Principles

Credit Terms and Discounts

Common Misconceptions

Calculation and Reporting

Important Operations

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