Question
1- When the business returns goods previously purchased on credit at a cost of $2,900, which of these statements is/are correct for the correct journal
1- When the business returns goods previously purchased on credit at a cost of $2,900, which of these statements is/are correct for the correct journal double entry?
I Debit Cash A/c with $2,900
II Credit Purchases Returns A/c with $2,900
Select one:
a. Both (I) and (II) are incorrect
b. Only II is correct
c. Only I is correct
d. Both (I) and (II) are correct
2- A business applies the allowance method of accounting for customers that may not pay for goods sold on credit. Its Revenue from Credit Sales was $450,000. It has been estimated that 2.5% of these credit sales should be accounted for using the allowance method. Which of the following statements is/are correct regarding the correct journal for double entry?
I Debit Sales A/c with $9,000; and Credit Bad Debts A/c with $9,000
II Debit Bad Debts A/c with $11,250; Credit Provision (or Allowance) for Bad Debts with $11,250
Select one:
a.
Only Statement II is correct
b. Both (I) and (II) are correct
c. Both (I) and (II) are incorrect
d.
Only Statement I is correct
3-
Which of these statements is/are correct?
I A contingent liability is a possible obligation depending on whether some uncertain future event occurs.
II A company would prefer not to disclose its contingent liabilities because they reveal possible future problems that could negatively impact the companys financial position.
Select one:
a. Both (I) and (II) are correct
b. Both (I) and (II) are incorrect
c. Only I is correct
d. Only II is correct
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