1. A sale of common stock would be recorded with a: a. Debit to revenues. b. Credit to assets. c. Credit to common stock. d. Debit to common stock. 2 Consider the following events for Betterment Inc.: January 1 Betterment purchases gasoline for $200 on account January 7 Betterment advertises lawn mowing servioes for $100 per lawn. January Betterment signs up 8 customers who pay a total of $800 cash. Janury 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used January 13 Betterment pays for the gasoline purchased on January 1. Under accrual-basis accounting, what is the appropriate day to record the expenses related to the gasoline? a. January 1. b. January 7. C. January 12 d. January 13. 3. Which of the following will change the balance in the accounts recevable account? a. Returns of credit sales. b. A customer allows the discount period on their last purchase to pass without paying their account. C. Recording the adjusting entry to recognize Bad Debts Expense. d. None of the above is correct. 4. "Inventory is: a. Reported as a long-term asset on the balance sheet. b. Is a current liability. c. A current asset. d. A major expense on the income statement 5. Eric Company has the following information for the year just completed: I Total Sales Revenue $860,000 Sales Retums and Allowances 50,000 Sales Discounts 30,000 Ending Inventory 110,000 Gross Profit 100,000 Net Purchases 650,000 What is the amount of Cost of Goods Sold for Eric Company? a. $210,000. b. $230,000 c. $680,000 d. $780,000 6. The Sub Shop, Inc. borrowed $10,000 on October 1, 2015, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on April 1, 2016. In connection with this note, the adjusting entry needed on December 31, 2015 would be: a. Interest Payable 600 Cash 600 b. Cash 300 Interest Payable 300 c. Interest Expense 600 Interest Payable 600 d. Interest Expense 300 Interest Payable 300 7. A building was purchased for $60,000. The asset has an expected useful life of 6 years and depreciation expense each year is $9,000 using the straight-line method. What is the residual value of the building? a. $0. b. $6,000. c. $10,000. d. $15,000