LQ2

Question 1

Initial/original investment in merchandise is debited by the owner to

Answer 1

Merchandise Inventory

Question 2

Additional/subsequqent investments in merchandise are debited to

Answer 2

Purchases

Question 3

The merchandise inventory account is NOT

Answer 3

updated

Question 4

It is a business entity that engages in ______ of merchandise. Most merchandising business are owned by only one person, or a sole proprietor

Answer 4

Buying and selling

Question 5

any item owned by the business entity that is intended for sale

Answer 5

merchandise

Question 6

at the end of the period (unsold goods) is determined by conducting a physical count

Answer 6

merchandise inventory

Question 7

through the physical count of the unsold goods, the ______ is determined

Answer 7

cost of goods sold

Question 8

the _____ uses the following accounts in recording his/her transactions:

1. Purchases
2. Purchase returns and allowances
3. Purchase discounts
4. Freight in or transportation in

Answer 8

Buyer

Question 9

the ____ uses the following accounts in recording his/her transactions:

1. Sales
2. Sales and Returns and Allowances
3. Sales Discounts
4. Freight out (Delivery expense)

Answer 9

Seller

Question 10

Initial/oroginal investment and additional investment in merchandise are both debited by the owner to

Answer 10

Merchandise inventory

Question 11

The ______ is updated whenever there is a purchase or sale of merchandise so that its balance is always available in the ledger

Answer 11

Merchandise investory

Question 12

the merchandise inventory is determined at the end of every year that why it is called

Answer 12

periodic inventory method

Question 13

The ___ account is also available from the ledger; hence, there is no need to compute for its balance

Answer 13

Cost of sales

Question 14

Physical count of goods at the end of the period is ______ the correctness of the merchandise inventory ledger account balance

Answer 14

still conducted to confirm

Question 15

The _____ uses ONLY ONE account in recording his merchandising transactions:

1. Debit merchandise inventory for purchases
2. Credit merchandise inventory for purchases returns and allowances
3. Credit merchandise inventory for purchase discounts
4. Debit merchandise inventory for freight-in

Answer 15

Buyer

Question 16

The ____ uses the following accounts in recording his merchandising transactions

1. Sales
2. Sales Returns and Allowances
3. Sales Discounts
4. Freight out
5. Cost of sales
6. Merchandise Inventory

Answer 16

Seller

Question 17

It is an unconditional written promise to pay someone a definite sum of money at a definite future date

Answer 17

promissory note

Question 18

may be interest-bearing or non-interest bearing

Answer 18

promissory note

Question 19

To the maker, it is a note payable; to the payee, it is a note receivable

Answer 19

promissory note

Question 20

The note is _____when it is paid at maturity date. An unpaid note at maturity is a ______ note

Answer 20

Honored, dishonored

Question 21

When a promissory note is dishonored by the
maker (customer), the seller makes an entry on
the date immediately following the maturity date of the note by a ______ for the maturity value of the note and credit to (1) Notes Receivable for the principal amount and (2) Interest Income for the interest already earned.

Answer 21

debit to Accounts Receivable

Question 22

When the dishonored note has been reclassified as _____, it becomes collectible any time at the discretion of the seller

Answer 22

accounts receivable

Question 23

If the period covered by the note is
_________, the due
date is determined by counting the number
of months from the date of the note. For
example, the maturity date of a 3-month
note dated May 1 is August 1.

Answer 23

expressed in number of months

Question 24

How to Determine . . . continued
2. If the period covered by the note is
expressed in_____, it is
necessary to count the exact number of
days. For example, a 90-day note dated
July 1 will mature on September 29

Answer 24

number of days

Question 25

Represents the interest due on the note

Answer 25

I

Question 26

Represents the principal or face amount of the note

Answer 26

P

Question 27

Represents the principal or face amount of the note

Answer 27

p

Question 28

Represent the specified rate of interest on the face of the note

Answer 28

r

Question 29

The time or period covered by the interest to be recorded

Answer 29

t