Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
If a customer returns faulty goods to a business, in which book of prime entry should the business record this return?
Answer:
sales returns journal
When a customer returns goods that were previously sold to them, the transaction is recorded in the Sales Returns Journal (also known as the Returns Inward Book). This book tracks all goods returned by customers, reducing the total sales figure.
2
How is Net Sales calculated in relation to total sales?
Answer:
Return inwards
Net sales are determined by subtracting sales returns and allowances (also known as return inwards) from the gross sales figure. This adjustment reflects the actual revenue generated from sales after accounting for goods returned by customers.
3
Which item is deducted from total sales to determine net sales?
Answer:
Return inwards
Net sales are calculated by taking the gross sales revenue and subtracting sales returns, allowances, and discounts. 'Return inwards' represents goods returned by customers to the business, which effectively reduces the total sales revenue generated during the period, thus it is subtracted to arrive at the net sales figure.
4
Which specialized journal uses a credit note as the primary source document for recording transactions?
Answer:
Sales return journal
A credit note is issued by a seller to a buyer to reduce the amount owed, typically when goods are returned. Therefore, the sales return journal, which records the return of goods previously sold on credit, relies on credit notes as the source document for these entries.
5
Which document serves as the primary source for recording transactions in the sales returns journal?
Answer:
Credit note
A credit note is issued by a seller to a buyer to reduce the amount the buyer owes, typically due to returned goods or damaged items. This document acts as the source for the sales returns book (returns inwards), as it provides evidence for the reduction in sales revenue and the corresponding decrease in trade receivables.
6
When a customer returns goods, which account should be debited?
Answer:
Return inward account
When goods previously sold are returned by a customer, the transaction is recorded in the 'Returns Inward' or 'Sales Return' account. Since sales are a credit entry, the return of those goods acts as a debit to the Returns Inward account to reduce the total sales figure for the period.
7
When a customer returns goods purchased on credit, which document should the seller issue to the customer?
Answer:
credit note
A credit note is a document issued by a seller to a buyer to notify them that their account has been credited for the value of goods returned or for an overcharge. This effectively reduces the amount the buyer owes to the seller, serving as the formal accounting record for the return of goods.
8
In which journal is a credit note or credit memo typically recorded?
Answer:
Sales return day book
A credit note is issued to a customer when goods are returned. Consequently, these transactions are recorded in the Sales Return Day Book (or Sales Return Journal) to reduce the customer's balance and adjust the sales records accordingly.
9
When a customer returns merchandise previously sold to them, which account should be debited?
Answer:
Sales return and allowances
Sales returns and allowances is a contra-revenue account used to record the return of goods by customers. Since sales revenue is normally a credit balance, a debit to the sales returns account reduces the total net sales for the period.
10
Which specialized journal utilizes a credit note as the primary source document for recording transactions?
Answer:
Sales return journal
A credit note is issued by a seller to a buyer when goods are returned or an overcharge is corrected. When a business receives returned goods from a customer, it issues a credit note to reduce the customer's account balance. Consequently, these transactions are recorded in the Sales Return Journal (also known as the Returns Inward Book).