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