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Study Resources (Accounting)

21) In a perpetual inventory system, the Merchandise Inventory account is updated: A) at the end of the accounting period. B) once each month. C) when merchandise is purchased. D) The account never needs updating. 22) Only periodic systems must take a physical inventory at year-end. 23) When a perpetual inventory system is used, a physical.
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11) Warner Enterprises was unable to collect a $1,000 note receivable plus $60 interest on the maturity date, but hoped to collect the amount in the future. Warner should record this as: A) debit Bad Debts Expense $1,000; credit Notes Receivable $1,000. B) debit Allowance for Doubtful Accounts $1,060; credit Notes Receivable.
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11) A promissory note comes due on the: A) discount date. B) maturity date. C) interest note. D) issue date. 12) The basic formula for calculating the interest on a note is: A) Interest = Principal × Rate × Time. B) Interest = (Principal × Rate) - Time. C) Interest = (Principal × Time) + Rate. D) Interest =.
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21) A company uses the allowance method and has determined a customer's bill for $2,000 must be written off. The journal entry to record the write off is: A) Allowance for Doubtful Accounts $2,000 Bad Debt Expense $2,000 B) Allowance for Doubtful Accounts $2,000 Accounts Receivable $2,000 C) Accounts Receivable $2,000 Allowance for Doubtful Accounts $2,000 D) Bad Debt Expense $2,000 Allowance for Doubtful Accounts $2,000 22).
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21) The journal entry for accrued interest on a note payable includes: A) debiting Interest Expense. B) debiting Accrued Interest Payable. C) crediting Interest Expense. D) debiting Accrued Interest Receivable. 22) Betty's Boutique discounts its own 120-day, 6%, $25,000 note payable at a bank. It records the proceeds as: A) debit Cash $24,500; debit Discounts on.
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15.2   Learning Objective 15-2 1) Tracking individual inventory items is tracked in the: A) accounts receivable ledger. B) inventory ledger. C) accounts payable ledger. D) purchases journal. 2) An entry to record the payment to a vendor was correctly recorded and posted to the general ledger but was not posted to the subsidiary ledger. This error.
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12.3   Learning Objective 12-3 1) The post-closing trial balance contains: A) assets and liabilities. B) all accounts with balances. C) only permanent accounts. D) All of these answers are correct. 2) The post-closing trial balance is prepared from: A) the income statement columns on the worksheet. B) the balance sheet columns on the worksheet. C) the trial balance columns.
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11) When an account receivable is written off as uncollectible, it decreases Bad Debts Expense. 12) If a recovery of a written-off account is made in the same year using the allowance method, the Bad Debts Recovered account would be used. 13) Carolina Sports uses the allowance method of accounting for uncollectible.
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60) Discuss the purpose of a detailed income statement. Briefly describe the major kinds of business activities covered on a detailed income statement. 61) Discuss the purpose of a classified balance sheet. Include a description of the major balance sheet classifications including: current assets, plant and equipment, current liabilities, and long-term.
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13.4   Learning Objective 13-4 1) No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause: A) total assets to be overstated. B) total liabilities to be understated. C) net income to be understated. D) None of these are correct. 2) The journal entry.
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14.4   Learning Objective 14-4 1) The adjusting entry for accrued interest on a notes receivable includes: A) a debit to Interest Expense; a credit to Interest Revenue. B) a debit to Accrued Interest Receivable; a credit to Interest Revenue. C) a debit to Interest Revenue; a credit to Accrued Interest Payable. D) a debit to.
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11) Accrued interest resulting from a trade note receivable would have which effect on the categories? A) Total liabilities would be increased. B) Total assets would be increased. C) Owner's equity would be decreased. D) None of these answers are correct. 12) Accrued interest on a note payable would have which effect on the categories? A).
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41) In what category in a classified balance sheet is Mortgage Payable found? A) Plant and Equipment B) Current Liabilities C) Long-term Liabilities D) Both B and C are correct. 42) The left and right columns on the financial statements are used for debits and credits. 43) The amount for Cost of Goods Sold is found.
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13.3   Learning Objective 13-3 1) 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 Expense B) Accounts Receivable C) Accounts Payable D) Bad Debts Recovered 2) If the allowance method of accounting for uncollectible receivables is used,.
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  14.1   Learning Objective 14-1 1) A written promise to pay a certain sum of money to another person or company is a: A) Promissory Accounts Payable. B) Promissory Note Payable. C) Promissory Accounts Receivable. D) Promissory Note Receivable. 2) James borrowed $550 from Tracy. James promised in writing that he would repay the money to Tracy.
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13.2   Learning Objective 13-2 1) Gross Accounts Receivable is $10,000. Allowance for Doubtful Accounts has a credit balance of $200. Net sales for the year are $150,000. In the past, 2% of sales had proved uncollectible. What would be the adjusted balance of the Allowance account under the income statement approach? A).
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16) Column 1 Column 2 Column 3 Column 4 Accounts receivable 17) Column 1 Column 2 Column 3 Column 4 Allowance for doubtful accounts 18) Column 1 Column 2 Column 3 Column 4 Bad debts expense 19) Column 1 Column 2 Column 3 Column 4 Bad debts recovered Use the account code numbers to identify how the following transactions would be journalized. [1]Cash [2]Accounts.
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11) Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would: A) debit Merchandise Inventory and credit Cost of Goods Sold. B) debit Cost of Goods Sold and credit Merchandise Inventory. C) debit Sales and credit Cost of Goods Sold. D).
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14.2   Learning Objective 14-2 1) For the maker, being given additional time to settle an account with issuance of a note results in a shift of: A) assets from Notes Receivable to Accounts Receivable. B) assets from Accounts Receivable to Notes Receivable. C) liabilities from Notes Payable to Accounts Payable. D) liabilities from Accounts Payable.
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21) Sterling Supply uses a periodic inventory system. Magnum sold 25 globes during March. Other data for March includes: Mar. 1 Balance 20 @ $12 11  Purchased 10 @ 11 25  Purchased 10 @ 10 Ending inventory under the weighted-average method is: A) $281.25. B) $155.00. C) $180.00. D) $168.75. 22) Sterling Supply uses a periodic inventory system. Magnum sold.
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36) Evaluate the differences of the effect on the financial statements between the income statement approach and the balance sheet approach for estimating bad debts expense on the financial statement presentation. 37) Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 8% of sales Accounts receivable.
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11) The principle of consistency states that: A) changes in accounting methods should occur from one fiscal period to the next. B) a company cannot change from one inventory valuation method to another. C) a company should switch from LIFO to FIFO every other period. D) by using the same method, the financial statements.
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Given the following accounts: [1]Cash [2]Accounts receivable [3]Merchandise inventory [4]Supplies [5]Accounts payable [6]Sales [7]Sales returns and allowances [8]Sales discounts [9]Cost of goods sold [10]Purchases [11]Purchase returns and allowances [12]Purchase discounts [13]Freight-in Indicate the account(s) to be debited and credited to record the following transactions. 38) Purchased merchandise with credit terms of 2/10, n/30. - Perpetual Debit ________ & ________ Credit ________ & ________ 39) Purchased merchandise with.
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31) Prepare general journal entries for Huckabee Corporation for the following transactions: 200x Dec. 1 Discounted its own $32,000, 60-day, 9% note at Colo Bank. 31 Accrued the interest expense on the discounted note. 200x Jan. 15 Paid the discounted note. Given the following accounts: [1]Cash [2]Notes receivable [3]Accounts receivable [4]Interest receivable [5]Notes payable [6]Accounts payable [7]Interest payable [8]Discount on notes payable [9] Interest expense [10]Interest.
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21) The balance sheet approach estimates a percentage of Accounts Receivable that is uncollectible. 22) The income statement approach estimates a percentage of sales that is uncollectible. 23) Using the balance sheet approach, the balance in Allowance for Doubtful Accounts is taken into consideration when finding the adjustment. 24) Using the income statement.
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57) The following accounts are on the Balance Sheet section of Great Lakes Camping worksheet for the month ended January 31, 200x. Required: Prepare a classified balance sheet. Account Balance Sheet Debit Balance Sheet Credit Cash 2 Accounts Receivable 14 Merchandise Inventory 12 Store Equipment 6 Accumulated Depreciation - Store Equipment 2 Accounts Payable 3 Mortgage Payable 16 Great Lakes, Capital 2 Additional information: Withdrawals for the period are $2,.
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14.3   Learning Objective 14-3 1) When a business endorses a note and transfers it to a financial institution, the process is called: A) dishonoring a note receivable. B) collecting a note receivable. C) cosigning a note receivable. D) discounting a note receivable. 2) When a note receivable is discounted, the business that endorses the note becomes.
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30) Prepare journal entries for the following transactions for HO Train Shop applying the perpetual inventory system. Omit explanations. Mar. 2 Purchased on account 200 model engines for $2,000. 12 Returned 20 engines for full credit. 19 Sold 50 of the engines to R. Holmes for $1,000 cash. 25 Paid the balance due on.
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13.1   Learning Objective 13-1 1) Which of the following situations would more likely not result in bad debts? A) The company extends credit easily. B) The company has a strict credit policy. C) The company has a cash only policy. D) None of these answers are correct. 2) What type of account is an Allowance for.
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11) The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account. This error would cause: A) total assets to be overstated. B) total liabilities to be understated. C) net income to be understated. D) None of these are correct. 12) The adjustment for bad debts using the.
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12.2   Learning Objective 12-2 1) How is Income Summary closed if the company had a net loss? A) Credit Income Summary; debit Capital B) Debit Income Summary; credit Capital C) Debit Capital; credit Withdrawals D) Debit Withdrawals; credit Capital 2) How is Income Summary closed if the company had a net income? A) Debit Capital; credit Income.
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31) Plant and Equipment is usually listed: A) in alphabetical order. B) in order of liquidity. C) by how long they will last. D) dollar value. 32) The ending merchandise inventory was overstated. This error would cause: A) net income to be understated. B) assets to be understated. C) net income to be overstated. D) expense to be overstated. 33).
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33) Joe owns an auto parts store called Joe's Auto Care. The following transactions took place during November of the current year. November 7Purchased merchandise on account from Wheeler Auto for $4,300. November 9Paid freight charges of $230 on merchandise purchases on the 7th. November 11Sold merchandise on account to Lancaster Auto Sales.
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13.5   Learning Objective 13-5 1) The two methods of accounting for uncollectible receivables are the direct write-off method and the: A) equity method. B) allowance method. C) interest method. D) cost method. 2) The two methods of accounting for uncollectible receivables are the allowance method and the: A) cost method. B) interest method. C) direct write-off method. D) equity method. 3).
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40) Column 1 Column 2 Column 3 Column 4 Sales 41) Column 1 Column 2 Column 3 Column 4 Sales Returns and Allowances 42) Column 1 Column 2 Column 3 Column 4 Sales Discounts 43) Column 1 Column 2 Column 3 Column 4 Depreciation Expense 44) Prepare the closing entries from the following information on the PC Pros Company worksheet income statement columns. Income Statement Debit       Credit Sales20 Sales Ret. and Allow.1 Income Summary56 Purchases14 Pur. Ret. and.
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21) Administrative Expenses include: A) Insurance Expense. B) Delivery Expense. C) Advertising Expense. D) None of the above are correct. 22) Other Income is used to: A) record payments from sales customers. B) record any revenue from activities other than sales. C) record all revenue. D) record owner investments. 23) Other Expense is used to record: A) selling expenses. B) administrative expenses. C).
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  15.1   Learning Objective 15-1 1) In a perpetual inventory system: A) Merchandise Inventory is debited every time inventory is purchased. B) Cost of Goods Sold is debited every time inventory is sold. C) a physical inventory is taken at least annually. D) all of the above take place. 2) Under the perpetual system, the purchase of.
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