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| 1 | |
Purchases of merchandise are |
| | A) | debited to Merchandise Inventory. |
| | B) | credited to Merchandise Inventory. |
| | C) | debited to Purchases. |
| | D) | credited to Sales. |
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| 2 | |
On the financial statements prepared at the end of an accounting period, the ending merchandise inventory is shown on |
| | A) | the balance sheet but not on the income statement. |
| | B) | the income statement but not on the balance sheet. |
| | C) | both the income statement and the balance sheet. |
| | D) | the statement of owner's equity. |
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| 3 | |
Allowance for Doubtful Accounts is |
| | A) | subtracted from Accounts Receivable in the Assets section of the balance sheet. |
| | B) | deducted from Sales in the Revenue section of the income statement. |
| | C) | listed in the Operating Expenses section of the income statement. |
| | D) | listed in the Liabilities section of the balance sheet. |
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| 4 | |
The adjusting entry for uncollectible accounts requires a debit to |
| | A) | Allowance for Doubtful Accounts and a credit to Accounts Receivable. |
| | B) | Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts. |
| | C) | Uncollectible Accounts Expense and a credit to Accounts Receivable. |
| | D) | Allowance for Doubtful Accounts and a credit to Uncollectible Accounts Expense. |
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| 5 | |
Which of the following statements is not correct? |
| | A) | Uncollectible Accounts Expense is a contra asset account. |
| | B) | The cost less the salvage value equals the depreciable base of a long-term asset. |
| | C) | Each adjustment for an accrued expense includes a credit to a liability account. |
| | D) | If a firm records prepaid expense items in expense account when they pay for them, their adjustment at the end of the period to record the unexpired portion would include a debit to an asset account and a credit to an expense account. |
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| 6 | |
The adjusting entry to record accrued interest on a note payable requires a debit to |
| | A) | Interest Income and a credit to Notes Payable. |
| | B) | Interest Payable and a credit to Interest Expense. |
| | C) | Interest Expense and a credit to Cash. |
| | D) | Interest Expense and a credit to Interest Payable. |
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| 7 | |
Allowance for Doubtful Accounts is reported in the |
| | A) | Assets section of the balance sheet. |
| | B) | Operating Expenses section of the income statement. |
| | C) | Liabilities section of the balance sheet. |
| | D) | Cost of Goods Sold section of the income statement. |
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| 8 | |
On May 1, 20--, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20-- is |
| | A) | $600. |
| | B) | $1,050. |
| | C) | $1,200. |
| | D) | $1,800. |
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| 9 | |
On May 1, 20--, a firm purchased a 1-year insurance policy for $3,600 and paid the full premium in advance. The insurance expense associated with this policy for 20-- is |
| | A) | $3,600. |
| | B) | $2,400. |
| | C) | $2,100. |
| | D) | $1,200. |
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| 10 | |
On January 2, 20--, a firm purchased equipment for $8,500. Depreciation expense for 20--, given the straight-line method, a 5-year useful life, and a salvage value of $1,500, is |
| | A) | $1,500. |
| | B) | $1,700. |
| | C) | $1,200. |
| | D) | $1,400. |
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