Principle of accounting 1 1-30

Question 1 of 30    3.3334 Points
What financial statement shows the amount for Freight-In?

 

    A. Income Statement   
 

    B. Statement of Owner’s Equity   
 

    C. Balance Sheet   
 

    D. Trial balance   
Question 2 of 30    3.3334 Points
The second entry to adjust Merchandise Inventory includes:

 

    A. a debit to Merchandise Inventory.   
 

    B. a debit to Income Summary.   
 

    C. a credit to Merchandise Inventory.   
 

    D. None of these are correct.   
Question 3 of 30    3.3334 Points
The income statement columns on a worksheet have subtotals as follows: debit column, $10,500, and credit column, $9,000. This indicates that:

 

    A. the company incurred a net loss of $1,500.   
 

    B. there was an error in the adjustments columns.   
 

    C. there was an error in the income statement columns.   
 

    D. the company earned a net income of $500.   

Question 4 of 30    3.3334 Points
From the following items, which would most likely cause the recording of unearned revenue?

 

    A. Potential sale of merchandise   
 

    B. Legal fees collected after work is performed   
 

    C. Purchase of merchandise on account   
 

    D. Subscriptions collected in advance for a magazine   

Question 5 of 30    3.3334 Points
The normal balance for Unearned Rent is:

 

    A. zero.   
 

    B. a credit.   
 

    C. a debit.   
 

    D. dependent on circumstances.   

Question 6 of 30    3.3334 Points
The adjustment for supplies used would be to:

 

    A. debit Supplies; credit Cash.   
 

    B. debit Supplies; credit Supplies Expense.   
 

    C. debit Supplies Expense; credit Supplies.   
 

    D. debit Supplies; credit Accounts Payable.   

Question 7 of 30    3.3334 Points
When completing a worksheet:

 

    A. the beginning inventory amount appears in the adjustment credit column.   
 

    B. the ending inventory amount appears in the unadjusted trial balance debit column of the worksheet.   
 

    C. the beginning inventory amount appears in the balance sheet debit column of the worksheet.   
 

    D. the ending inventory amount appears in the income statement debit column.   

Question 8 of 30    3.3334 Points
The financial statement on which Rental Income would appear is the:

 

    A. owner’s equity statement.   
 

    B. income statement.   
 

    C. balance sheet.   
 

    D. operations statement.   

Question 9 of 30    3.3334 Points
As the Unearned Rent is earned:

 

    A. the liability account is not affected but the revenue account is decreased.   
 

    B. the liability account is increased and the revenue account is decreased.   
 

    C. the liability account is decreased and the revenue account is not affected.   
 

    D. the liability account is decreased and the revenue account is increased.   
Question 10 of 30    3.3334 Points
On the worksheet the ending Merchandise Inventory account appears in the:

 

    A. adjustment, adjusted trial balance, and balance sheet column.   
 

    B. adjustment column.   
 

    C. adjustment, adjusted trial balance, and income statement columns.   
 

    D. adjusted trial balance and balance sheet columns.   
Question 11 of 30    3.3334 Points
During the preparation of the worksheet, the $800 balance of the Dennis, Withdrawal account was extended as a debit to the income statement columns. This error will:

 

    A. understate net income $800.   
 

    B. overstate net income $1,600.   
 

    C. understate net income $1,600.   
 

    D. overstate net income $800.   
Question 12 of 30    3.3334 Points
As Unearned Rent is earned, it becomes:

 

    A. an expense.   
 

    B. an asset.   
 

    C. a liability.   
 

    D. a revenue.   

Question 13 of 30    3.3334 Points
What inventory method is used when the inventory balance is updated only at the end of the accounting period?

 

    A. Periodic   
 

    B. Net Income   
 

    C. Cost of Goods Sold   
 

    D. Perpetual   

Question 14 of 30    3.3334 Points
When the adjustment for Unearned Rent is made:

 

    A. liabilities decrease.   
 

    B. revenue increases.   
 

    C. assets decrease.   
 

    D. Both A and B are correct.   

Question 15 of 30    3.3334 Points
Ending inventory:

 

    A. does not affect Cost of Goods Sold.   
 

    B. increases Cost of Goods Sold.   
 

    C. decreases Cost of Goods Sold.   
 

    D. increases liabilities.   

Question 16 of 30    3.3334 Points
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer’s account as uncollectible?

 

    A. Bad Debts Recovered   
 

    B. Accounts Receivable   
 

    C. Accounts Payable   
 

    D. Bad Debts Expense   

Question 17 of 30    3.3334 Points
The adjustment for bad debts using the percentage of receivables ignored the credit balance in the Allowance account. This error would cause:

 

    A. net income to be understated.   
 

    B. total liabilities to be understated.   
 

    C. total assets to be overstated.   
 

    D. None of these are correct.   

Question 18 of 30    3.3334 Points
In the direct write-off method, writing off an account causes:

 

    A. an increase in Accounts Receivable.   
 

    B. an increase in Liabilities.   
 

    C. an increase in expense.   
 

    D. a decrease in the Allowance account.   
Question 19 of 30    3.3334 Points
Net Realizable Value can be defined as:

 

    A. the Gross Accounts Receivable minus the Allowance for Doubtful Accounts.   
 

    B. the Current Bad Debts Expense.   
 

    C. the amount of Accounts Receivable you do not expect to collect.   
 

    D. the Gross Accounts Receivable.   
Question 20 of 30    3.3334 Points
Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $200,000 and Allowance for Doubtful Accounts has a debit balance $20,000. What is the net realizable value of the accounts receivable?

 

    A. $20,000   
 

    B. $220,000   
 

    C. $200,000   
 

    D. $180,000   

Question 21 of 30    3.3334 Points
At December 31, 200x, Brooke’s Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad Debts Expense:

 

    A. includes a debit to the Allowance account for $822.   
 

    B. includes a debit to the Allowance account for $568.   
 

    C. includes a credit to the Allowance account for $1,432.   
 

    D. includes a credit to the Allowance account for $42.   
Question 22 of 30    3.3334 Points
Indy Sport and Hobby’s Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense:

 

    A. includes a debit to the Bad Debts Expense account for $500.   
 

    B. includes a credit to the Bad Debts Expense account for $1,300.   
 

    C. includes a debit to the Bad Debts Expense account for $900.   
 

    D. includes a credit to the Bad Debt Expense account for $500.   

Question 23 of 30    3.3334 Points
Joe’s Auto Repair estimates that approximately 3% of net credit sales are uncollectible. Joe’s calculates Bad Debts Expense using the:

 

    A. balance sheet method.   
 

    B. direct write-off method.   
 

    C. income statement method.   
 

    D. gross method.   
Reset Selection

Question 24 of 30    3.3334 Points
The entry to adjust for bad debts was ignored. This error would cause:

 

    A. total liabilities to be understated.   
 

    B. net income to be understated.   
 

    C. total assets to be overstated.   
 

    D. None of these are correct.   
Reset Selection
Question 25 of 30    3.3334 Points
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer’s account as uncollectible?

 

    A. Bad Debt Expense   
 

    B. Bad Debts Recovered   
 

    C. Accounts Payable   
 

    D. Allowance for Doubtful Accounts   
Question 26 of 30    3.3334 Points
Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to:

 

    A. debit Bad Debts Expense; credit Accounts Receivable.   
 

    B. debit Allowance for Doubtful Accounts; credit Accounts Receivable.   
 

    C. debit Sales; credit Allowance for Doubtful Accounts.   
 

    D. debit Allowance for Doubtful Accounts; credit Bad Debts Expense.   
Question 27 of 30    3.3334 Points
The amount of Accounts Receivable a company estimates it will collect is the:

 

    A. Gross Accounts Receivable.   
 

    B. Accounts Receivable Allowance.   
 

    C. Bad Debts Allowance.   
 

    D. Net Realizable Value.   
Question 28 of 30    3.3334 Points
The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

 

    A. fixed assets.   
 

    B. owner’s equity.   
 

    C. current liabilities.   
 

    D. current assets.   
Question 29 of 30    3.3334 Points
What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method.
Allowance for Doubtful Accounts    150
Accounts Receivable-Tim Morgan    150

 

    A. The firm is making a collection of a previously written-off account.   
 

    B. The firm is writing off a specific account.   
 

    C. The firm is estimating its uncollectible accounts.   
 

    D. It is a reversing entry.   

Question 30 of 30    3.3334 Points
The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account. This error would cause:

 

    A. total liabilities to be understated.   
 

    B. total assets to be overstated.   
 

    C. net income to be understated.   
 

    D. None of these are correct.