Question

Which one of the following general statements is incorrect?

1) An NSF cheque is recorded by an adjusting entry in the receipts journal
2) A sale return is recorded as a negative amount in the sales journal
3)ash sales are recorded as other receipts in the receipts journal
4) New customers may be added from both the sales and receipts journals

Answer 1

An NSF cheque is recorded by an adjusting entry in the receipts journal, a sale return is recorded as a negative amount in the sales journal, cash sales are recorded as other receipts in the receipts journal, and new customers may be added from both the sales and receipts journals. The incorrect statement is cash sales being recorded as other receipts in the receipts journal.

Step-by-step explanation:

To determine which general statement is incorrect, let's examine each option.

1. An NSF cheque is recorded by an adjusting entry in the receipts journal: This is true. When a cheque bounces or is not honored by the bank, it is considered a non-sufficient funds (NSF) cheque and needs to be adjusted in the receipts journal.
2. A sale return is recorded as a negative amount in the sales journal: This is true. When a customer returns a product, it is recorded as a negative amount in the sales journal to subtract it from the total sales.
3. Cash sales are recorded as other receipts in the receipts journal: This is incorrect. Cash sales should be recorded in the cash receipts journal as a specific type of receipt.
4. New customers may be added from both the sales and receipts journals: This is true. New customers can be added from both journals, as they represent different aspects of the company's transactions.

Therefore, the incorrect statement is: Cash sales are recorded as other receipts in the receipts journal.