1. Which of the following is not true concerning the accrual basis of accounting?

a. Revenues are recognized when earned

b. Expenses are recognized when incurred

c. Cash received for services to be performed in future months is recognized as revenue when the cash is received.

d. Cash received for services to be performed in future months is recognized as a liability when the cash is received.

2. A company has merchandise inventory at the beginning of the year of $14,000 and merchandise inventory at the end of the year of $18,000. Which of the following would be included in the adjusting entry to place the ending inventory on the books?

a. Debit Income Summary, $14,000

b. Credit Income Summary, $18,000

c. Debit Merchandise Inventory, $14,000

d. Credit Merchandise Inventory, $18,000

3. MJF Company has net credit sales of $2,500,000, and estimates bad debts at 0.5% of net credit sales. Which of the following journal entries would be used to record estimated uncollectible accounts receivable?

a. Debit Uncollectible Accounts Expense for $12,500 and credit Allowance for Doubtful Accounts for $12,500

b. Debit Uncollectible Accounts Expense for $12,500 and credit Accounts Receivable for $12,500

c. Debit Uncollectible Accounts Expense for $125,000 and credit Allowance for Doubtful Accounts for $125,000

d. Debit Uncollectible Accounts Expense for $125,000 and credit Accounts Receivable for $125,000

4.The four basic assumptions underlying financial accounting are?

a. materiality, cost-benefit, conservatism, and industry practice

b. separate entity, materiality, cost-benefit, and industry practice

c. separate entity, going concern, monetary unit of measurement, and periodicity of income

d. going concern, conservatism, industry practice, and materiality

5. Calderone Company purchased office equipment for $9,000 on October 1 of the current year. The office equipment has a useful life of 6 years and salvage value of $360. What is the amount of depreciation expense for the current year ending December 31?

a. $120

b. $360

c. $1,440

d. $1,080

6. Debtor Company borrowed $10,000 on a six-month note payable on November 1 of the current year. The note bears interest at an annual interest rate of 9 per cent. What is the amount of accrued interest payable at December 31 of the current year?

a. $900

b. $75

c. $750

d. $150

7. Which of the following best describes the Accumulated Depreciation account?

a. A contra-asset account with a normal debit balance

b. A contra-asset account with a normal credit balance

c. An expense account with a normal debit balance

d. An expense account with a normal credit balance

8. A company failed to record depreciation expense. Which of the following is not true?

a. The company's net income will be overstated

b. The company's total assets will be overstated

c. The owner's equity will be overstated

d. The company's total liabilities will be overstated

9. The Merchandise Inventory account appears on the worksheet in the:

a.Credit column of the balance sheet section

b. Debit column of the balance sheet section

c. Credit column of the income statement section

d. Debit column of the income statement section

10. What distinguishes a profit center from a cost center?

a. Profit centers have revenues and expenses

b. Profit centers have personnel costs

c. Cost centers are on the second floor

d. Profit centers are the most important operations in the business