19) Mary operates a wholesale business that distributes canned food. She receives a complaint from a customer and accepts S500 worth of product back from the customer that was billed on account. The cost of the product is $300. Which of the following entries is correct? a) Dr. Sales Returns and Allowances $500, Cr. A/R $500 b) Dr. Sales Returns and Allowances $500. Cr. A/R $500 and Dr. Inventory $300, Cr. COGS $300 c) Dr. A/R S500, Cr. Sales Returns and Allowances $500 d) Dr. A/R $500, Cr. Sales Returns and Allowances $500 and Dr. Inventory $300, Cr. COGS $300 20) As a result of inventory shrinkage: a) equity decreases b) there is no change to cquity c) equity increases equity may or may not decrease depending on the inventory valuation d) method used 21) Which of the following statements about gross and/or net income is true? a) Net income is usually larger than gross profit b) Net income is the difference between sales and cost of goods sold c) Gross profit is the difference between sales and cost of goods sold d) Gross profit and net income can be found on the balance sheet 22) Which of the following methods for valuing inventory would most likely be used for high value items such as cars and houses? a) Specific Identification b) FIFO c) None of the options d) Weighted Average 23) Uncamned revenue is classified as: a) revenue b) a liability c) an expense d) an asset 24) Adjusted trial balance is the next accounting process after adjustments are made a) TRUE b) FALSE 25) Long-term assets are those that are likely to be converted into cash or used within the next 12 months through the day-to-day operation of the business. a) TRUE b) FALSE 26) Current liabilities are amounts due to be paid within the next 12 months. a) TRUE b) FALSE 27) Senior management and accountants are responsible to ensure controls are in place to accurate track the value of inventory from the point of purchase to the point of sale. a) TRUE b) FALSE 28) Perpetual inventory system only updates the inventory and COGS values after physically counting the items on hand. a) TRUE b) FALSE 29) Sales returns occur when undesirable products are returned to the buyer. a) TRUE b) FALSE 30) All revenue accounts are closed to the income summary account a) TRUE b) FALSE 31) The income summary account is closed to the owner's capital account. a) TRUE b) FALSE 32) An overstatement of ending inventory results in an understatement of COGS and an understatement of net income. a) TRUE b) FALSE 33) A lower inventory days on hand means that inventory is less likely to become obsolete because it is sold in fewer days. a) TRUE b) FALSE