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- 1. Multiple ChoiceA corporation can incur liabilities but cannot own property. (p. 24)TrueFalse
- 2. Multiple ChoiceThe articles of incorporation typically include the name and address of the business, its purpose for operating, any limitations on its activities and rules for dissolving the corporation. (p. 244)TrueFalse
- 3. Multiple ChoiceUnlike a proprietorship, a corporation exists independent of its owners. (p. 245)TrueFalse
- 4. Multiple ChoiceThe total of accounts in the accounts payable ledger equals the balance of the controlling account, Accounts Payable. (p. 246)TrueFalse
- 5. Multiple ChoiceThe accounts payable ledger form contains the same columns as the general ledger except that it lacks a Credit Balance column. (p. 247)TrueFalse
- 6. Multiple ChoiceWhen a perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise InventoryTrueFalse
- 7. Multiple ChoiceThe perpetual inventory system is used, purchases of merchandise are accounted for directly to Merchandise Inventory. (p. 249TrueFalse
- 8. Multiple ChoiceThe income statement of a merchandising business places Purchases in a section titled Cost of Goods Sold, separate from other expenses. (p. 250)TrueFalse
- 9. Multiple ChoiceA purchase invoice lists the quantity, the description, and the price of each item and shows the total amount of the purchase. (p. 253)TrueFalse
- 10. Multiple ChoiceA transaction to record merchandise purchased with a trade discount would include a credit to Merchandise Discount. (p. 260)TrueFalse
- 11. Multiple ChoiceWhen journalizing a cash payment for advertising, the vendor's name is written in the Account Title column of the cash payments journal.TrueFalse
- 12. Multiple ChoiceWhen supplies are purchased for use in the business, the amount is recorded as a debit to Purchases. (p. 262)TrueFalse
- 13. Multiple ChoiceThe terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid within 15 days of the invoice date or the total invoice amount must be paid within 30 days. (p. 263)TrueFalse
- 14. Multiple ChoiceThe contra account Purchases Discount has a normal credit balance. (p. 263)TrueFalse
- 15. Multiple ChoiceThe petty cash account Cash Short and Over is a permanent account. (p. 265)TrueFalse
- 16. Multiple ChoiceExceeding a vendor's credit limit can cause a disruption in the company's ability to purchase merchandise. (p. 267)TrueFalse
- 17. Multiple ChoiceA journal is proved and ruled whenever a journal page is filled, and always at the end of a month. (p. 269)TrueFalse
- 18. Multiple ChoiceThe totals of the General amount columns of a cash payments journal are posted to the general ledger. (p. 270)TrueFalse
- 19. Multiple ChoiceThe total of an accounts payable trial balance should equal the total of Accounts Payable. (p. 272)TrueFalse
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