1. Payment of an account payable affects the components of the accounting equation in the following way. a) Decreases owner's equity and decreases liabilities. b) Increases assets and decreases liabilities. c) Decreases assets and increases owner's equity. d) Decreases assets and decreases liabilities. 2. An account that will have a zero balance after closing entries have been journalized and posted is: a) Service Revenue. b) Advertising Supplies. c) Prepaid Insurance. d) Accumulated Depreciation 3. Adjustments for unearned revenues: a) decrease liabilities and increase revenues. b) have an assets and revenues account relationship. c) increase assets and increase revenues. d) decrease revenues and decrease assets. 4. The correct order of presentation in a classified balance sheet for the following current assets is: a) accounts receivable, cash, prepaid insurance, inventories. b) cash, Inventories, accounts receivable, prepaid insurance. c) cash, accounts receivable, inventories, prepaid insurance. d) inventories, cash, accounts receivable, prepaid insurance. 5. A company writes a check to replenish a OMR 100 petty cash fund when the fund contains receipts of OMR 94 and OMR 5 in cash. In recording the check, the company should: a) debit Cash Over and Short for OMR 1. b) debit Petty Cash for OMR 94. c) credit Cash for OMR 94. d) credit Petty Cash for OMR 2. 6. Net sales for the month are OMR 700,000, and bad debts are expected to be 1.5% of net sales. The company uses the percentage-of-sales basis. If Allowance for Doubtful Accounts has a credit balance of OMR 15,000 before adjustment, what is the balance after adjustment? a) OMR 15,000. b) OMR 25,500. c) OMR 23,000. d) OMR 31,000 7. In periods of rising prices, LIFO will produce lower net income than FIFO (TRUE / FALSE) 8. Cost of goods available for sale consist of two elements: beginning inventory and ending inventory (TRUE/FALSE)