Which of the Following Would Require a Compound Journal Entry

question 98

Multiple Choice

Which of the following would require a compound journal entry?

• A) To record merchandise returned that was previously purchased on account.
• B) To record sales on account.
• C) To record purchases of inventory when a discount is offered for prompt payment.
• D) To record collection of accounts receivable when a cash discount is taken.

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Definitions:

Dividends Payable

A liability on a company's balance sheet that indicates the amount of dividends it owes to shareholders, to be paid out in the future.

Cash Flow Statement

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Operating Activities

Generally speaking, activities that affect current assets, current liabilities, or net income.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.