Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A) The sales journal is used for recording both cash sales and credit sales.
• B) Since the sales journal is used for a single purpose, there is no need to enter any descriptions.
• C) To provide an adequate audit trail, sales on credit should be recorded in both the sales journal and the general journal.
• D) The complete information for each sale of merchandise on credit can be recorded on one line of the cash receipts journal.

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Definitions:

Net Working Capital

A financial metric that represents the difference between a company's current assets and its current liabilities.

Total Assets Ratio

A financial metric that compares the total assets of a company to its sales or revenues, indicating how efficiently a company uses its assets.

Uses of Cash

The various ways in which a company or individual allocates cash resources, including operating expenses, investments, and financing activities.

Fixed Assets

Durable physical assets utilized in the running of a company, which aren't anticipated to be expended or turned into cash within one year.