Chapter 8: Recording and Evaluating Expenditure Process ActivitiesChapter 8: Recording and Evaluating Expenditure Process ActivitiesChapter 8: Recording and Evaluating Expenditure Process ActivitiesChapter 8Recording and Evaluating Expenditure Process ActivitiesMATCHING1. Match the following terms with the descriptions below.A. Inventory B. Net price methodC. Periodic inventory systemD. Perpetual inventory systemE. PurchasesF. Purchased discountG. Purchase returns and allowanceH. Raw materials inventoryI. Special JournalJ. Subsidiary ledger_____ 1. The account used by the periodic inventory system to account for the purchaseof products for resale._____ 2. A journal used to record transactions that occur frequently and in the same manner._____ 3. When the cost of inventory is recorded assuming the discount available will be taken._____ 4. This inventory system keeps track of the amount of inventory and cost of good sold continuously._____ 5. This account keeps track of the discounts taken under the periodic inventory system._____ 6. This ledger describes the details of a specific general ledger account. _____ 7. This inventory system determines the amount of inventory by physical count and calculates the cost of goods sold only at the end of specified time periods. _____ 8. Account used by the periodic system to record the cost of goods purchased that did not meet required specifications._____ 9. Account used to keep track of inventory used in a manufacturing process._____10. Account used by both the period and perpetual inventory system to show the cost the goods held for resale. Answer: 1. E 2. I 3. B 4. D 5. F 6. J 7. C 8. G 9. H 10. A Ainsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e152Chapter 8: Recording and Evaluating Expenditure Process ActivitiesMULTIPLE CHOICE2. Which of the following is not part of the expenditure process? A) Determine the need for goods/services B) Receive cash from sales during the period C) Receive goods and services D) Pay suppliers of goods and services Answer: B Difficulty: Easy 3. Which of the following is not a special journal? A) Depreciation journal B) Sales journal C) Cash receipts journal D) Purchases journal Answer: A Difficulty: Easy 4. In a purchases journal only one amount is recorded but that amount is posted by A) Debiting Accounts Payable and crediting Inventory B) Debiting Inventory and crediting cash C) Debiting cash and crediting accounts payable D) Debiting inventory and crediting accounts payable Answer: D Difficulty: Medium 5. The purpose of the account payable subsidiary ledgers is: A) Keep track of the various products being manufactured B) Monitor the balance in the various cash accounts at banks C) Identify individuals and companies who the company owes money D) Identify the cash inflow expected from people who owe money to the company Answer: C Difficulty: Medium 6. The total of the accounts payable subsidiary ledger is equal to: A) The balance in the general ledger purchases account B) The balance in the general ledger accounts receivable account C) The total amount the company owes to those provided inventory to the company D) The total amount of the liabilities in the general ledger Answer: C Difficulty: Medium Ainsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e153Chapter 8: Recording and Evaluating Expenditure Process Activities7. Which of the following entries reflects the use of a periodic inventory system? A) P u r c h a s e s X X X X A / P X X X XB) I n v e n t o r y X X X X A / P X X X XC) A / P X X X X C a s h X X X XD) A / P X X X X P u r c h a s e s X X X XAnswer: A Difficulty: Easy 8. Which of the following entries reflects the use of a perpetual inventory system? A) P u r c h a s e s X X X X A / P X X X XB) C o s t o f G o o d s S o l d X X X X A / P X X X XC) C o s t o f G o o d s S o l d X X X X I n v e n t o r y X X X XD) A / P X X X X P u r c h a s e R e t u r n s X X X XAnswer: C Difficulty: Easy 9. The gross method records the purchase discount. A) When it is taken B) When the inventory is purchased C) When the inventory is sold D) When the inventory is returned Answer: A Difficulty: Medium 10. If a company uses the perpetual inventory method and it purchases inventory on account worth $2,000 with terms 2/10 n/30 what will be the cost of the inventory when the inventory is purchased? A) $2,000 B) $1,800 C) $1,960 D) $2,200 Answer: C Difficulty: Medium Ainsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e154Chapter 8: Recording and Evaluating Expenditure Process ActivitiesAinsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e155Chapter 8: Recording and Evaluating Expenditure Process Activities11. The purchase discount lost accounts is used when with - A) The gross method is used with periodic system and the terms of the discount are not met. B) The net method is used with the perpetual system and the terms of the discount are met. C) The gross method is used with the periodic system the terms of the discount are not met. D) The net method applied to either the periodic or perpetual systems and the terms of the discount are not met. Answer: D Difficulty: Medium 12. Which of the following entries is made when a discount is taken and the perpetual systemuses the gross method? A)AP XXXX Cash XXXX Inventory XXXX B)Cost of Goods Sold XXXX Purchase discount XXXX C)Purchase Discount XXXX Inventory XXXX D)A/P XXXX Purchase Discount XXXX Cash XXXX Answer: A Difficulty: Hard 13. A company, using the net method, purchased inventory for $3,000 and term 2/10 net 30 but did not pay the bill in time to take advantage of the discount. The cost recorded in theinventory account after this event would be?A) $3,000B) $2,940C) $3,060D) Not enough data to determineAnswer: B Difficulty: HardAinsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e156Chapter 8: Recording and Evaluating Expenditure Process Activities14. Which of the following entries is made when a discount is taken and the periodic system uses the gross method? A) A P X X X X C a s h X X