10. La More Company had the following transactions during 2016:

Sales of $4,500 on account

Collected $2,000 for services to be performed in 2017

Paid $1,375 cash in salaries for 2016

Purchased airline tickets for $250 in December for a trip to take place in 2017

What is La Mores 2016 net income using accrual accounting?

a. $3,375

b. $5,375

c. $5,125

d. $3,125

11. Raxon Company borrowed $30,000 from the bank signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be:

a. debit Interest Expense, $1,800; credit Interest Payable, $1,800.

b. debit Interest Expense, $150; credit Interest Payable, $150.

c. debit Note Payable, $1,800; credit Cash, $1,800.

d. debit Cash, $450; credit Interest Payable, $450.

12. Under the accrual basis of accounting:

a. cash must be received before revenue is recognized.

b. net income is calculated by matching cash outflows against cash inflows.

c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

d. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

13. The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

a. Accounts Payable.

b. Purchase Returns and Allowances.

c. Sales Revenue.

d. Merchandise Inventory.

14. The collection of an $1,500 account within the 2 percent discount period will result in a

a. debit to Sales Discounts for $30.

b. debit to Accounts Receivable for $1,470.

c. credit to Cash for $1,470.

d. credit to Accounts Receivable for $1,470.

15. Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows:

Units Per unit price Total

Balance, 1/1/2017 200 $5.00 $1,000

Purchase, 1/15/2017 100 5.30 530

Purchase, 1/28/2017 100 5.50 550

An end of the month (1/31/2017) inventory showed that 160 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

a. $880

b. $800

c. $868

d. $1,212