A02.V.4.2 Principles of Accounting I Lesson 5 Questions

Question 1 of 40

2.5 Points

In what category in a classified balance sheet is Accounts Receivable found?

A. Plant and Equipment

B. Current Liabilities

C. Current Assets

D. Owner?s Equity

Question 2 of 40

2.5 Points

Net purchases + purchases returns and allowances + purchase discount equals __________.

A. net loss

B. net income

C. gross profit

D. gross purchases

Question 3 of 40

2.5 Points

The goods a company has available to sell to customers are called __________.

A. supplies

B. sales

C. Cost of Goods Sold

D. merchandise inventory

Question 4 of 40

2.5 Points

The contra-revenue accounts include __________.

A. Sales Tax Payable

B. Sales Returns and Allowances

C. Sales Discount

D. both B and C

Beginning merchandise inventory would be found on the worksheet in the __________.

A. income statement debit column

B. income statement credit column

C. balance sheet debit column

D. balance sheet credit column

Question 6 of 40

2.5 Points

Beginning and ending inventories for Webster?s Books are $9,000 and $6,000, respectively. The debit amounts (not including Income Summary. in the income statement columns of the worksheet total $14,000, and the credit amounts (not including Income Summary. total $15,500. The firm has a __________.

A. net income of $1,500

B. net loss of $1,500

C. net loss of $3,000

D. net income of $3,000

An account never used in a service business is __________.

A. Consulting Fees-Revenue

B. Interest Payable

C. Merchandise Inventory

D. Accumulated Depreciation?Equipment

Question 8 of 40

2.5 Points

Beginning inventory was $4,000, purchases totaled $22,000 and sales were $20,000. What is the ending inventory?

A. $2,000

B. $4,000

C. $6,000

D. $8,000

Question 9 of 40

2.5 Points

When completing a worksheet, __________.

A. the ending inventory amount appears in the income statement debit column

B. the beginning inventory amount appears in the adjustment credit column

C. the ending inventory amount appears in the unadjusted trial balance debit column of the worksheet

D. the beginning inventory amount appears in the balance sheet debit column of the worksheet

Question 10 of 40

2.5 Points

A contra-revenue account with a debit balance for returned goods is called __________.

A. Sales Returns and Allowances

B. Sales Discount

C. the credit period

D. the discount period

Question 11 of 40

2.5 Points

The beginning Merchandise Inventory account appears in the __________ on the worksheet.

A. adjustment column

B. trial balance and the balance sheet columns

C. trial balance and adjustment columns

D. all of the above

Question 12 of 40

2.5 Points

When using a periodic inventory method, what account is increased when you buy merchandise inventory?

A. Cost of Goods Sold

B. Beginning Inventory

C. Ending Inventory

D. Purchases

Question 13 of 40

2.5 Points

Net sales are __________.

A. gross Sales + sales discounts + sales returns and allowances

B. gross Sales - sales discounts - sales returns and allowances

C. revenue - sales discounts + sales returns and allowances

D. gross Sales + sales discounts - sales returns and allowances

Question 14 of 40

2.5 Points

Urban Camping sold goods for $200 to a charge customer. The customer returned $90 worth of goods for credit. Which entry is required to record the return transaction?

A. debit Sales Returns and Allowances $90; credit Accounts Receivable $90

B. debit Sales Returns and Allowances $90; credit Sales $90

C. debit Sales $90; credit Sales Returns and Allowances $90

D. debit Accounts Receivable $90; credit Sales Returns and Allowances $90

Question 15 of 40

2.5 Points

A characteristic of Sales Returns and Allowances is that __________.

A. it has a debit balance

B. it tracks returns from customers

C. it is a contra-revenue account

D. all of the above

Question 16 of 40

2.5 Points

The physical count of inventory was incorrect, which overstated the ending inventory. This would cause the __________.

A. Cost of Goods Sold to be overstated

B. Cost of Goods Sold to be understated

C. gross profit to be understated

D. net income to be understated

Question 17 of 40

2.5 Points

At the start of the year, Northern Lights had $8,000 worth of merchandise. What do we know about Northern Lights?

A. It is a service business.

B. It is a retail business.

C. The company ended with a net income last year.

D. The company ended with a net loss last year.

Question 18 of 40

2.5 Points

Which inventory appears in the balance sheet column of the worksheet?

A. ending inventory

B. beginning inventory

C. combination of beginning and ending inventories

D. none of the above

Question 19 of 40

2.5 Points

Customer returned merchandise for credit. This will be recorded with __________.

A. a debit to an asset account

B. a debit to a liability account

C. a credit to an asset account

D. None of these are correct

Question 20 of 40

2.5 Points

A classified balance sheet provides more information about the company to __________.

A. owners

B. creditors

C. suppliers

D. all of the above

Question 21 of 40

2.5 Points

Under the allowance method, Bad Debt Expense is recorded __________.

A. as an estimate

B. when an individual account is written off

C. several times during the year as needed

D. none of the above

Question 22 of 40

2.5 Points

The journal entry to write off an account judged to be uncollectible under the allowance would include a debit to __________.

A. Sales

B. Accounts Receivable

C. Allowance for Doubtful Accounts

D. Bad Debts Expense

Question 23 of 40

2.5 Points

A company writes off a specific account as uncollectible, but later the customer pays. The journal entry to record the reinstatement under the allowance method includes a(n. __________.

A. increase to Cash

B. decrease to Sales

C. decrease to Allowance for Doubtful Accounts

D. decrease to Bad Debts Expense

Question 24 of 40

2.5 Points

Harry?s Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible. Barber calculates Bad Debts Expense using the __________.

A. income statement approach

B. direct write-off method

C. balance sheet approach

D. aging the Accounts Receivable approach

Question 25 of 40

2.5 Points

Net Realizable Value can be defined as __________.

A. the Gross Accounts Receivable

B. the Current Bad Debts Expense

C. the amount of Accounts Receivable you do not expect to collect

D. the Gross Accounts Receivable minus the Allowance for Doubtful Accounts

Question 26 of 40

2.5 Points

After having written off a customer under the direct write-off method, the account will be reopened when the customer __________.

A. sends the full amount to pay off the account

B. sends any amount to pay on their account

C. pays the collection bureau

D. none of the above

Question 27 of 40

2.5 Points

After aging the receivables, Tim?s Toys estimates that $900 will not be collected, and the Allowance account has a debit balance of $325. The adjusting entry would be for __________.

A. $575

B. $900

C. $1,225

D. $325

Question 28 of 40

2.5 Points

At December 31, 2012, Brooke?s Horse Stable?s unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad Debts Expense __________.

A. includes a debit to the Allowance account for $568

B. includes a credit to the Allowance account for $42

C. includes a debit to the Allowance account for $822

D. includes a credit to the Allowance account for $1,432

Question 29 of 40

2.5 Points

The Allowance for Doubtful Accounts is adjusted __________.

A. at the end of each accounting period

B. each time a customer?s debt is satisfied

C. within one year of granting credit to a customer

D. each time a customer is granted credit

Question 30 of 40

2.5 Points

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer?s account as uncollectible?

A. Allowance for Doubtful Accounts

B. Bad Debt Expense

C. Accounts Payable

D. Bad Debts Recovered

Question 31 of 40

2.5 Points

A detailed analysis of Accounts Receivable to determine how long each account has been outstanding is called __________.

A. analyzing the Accounts Receivable

B. aging the uncollectible accounts

C. aging the Accounts Receivable

D. taking a percentage of sales on account

Question 32 of 40

2.5 Points

Colleen?s account was written off for $800. She received an inheritance from her uncle and wants to clear her account. The entry to record this is to __________.

A. debit Cash and credit Accounts Receivable/Maggie

B. debit Allowances for Doubtful Accounts, credit Accounts Receivable/Maggie, debit Cash, and credit Accounts Receivable/Maggie

C. debit Accounts Receivable/Maggie, credit Allowance for Doubtful Accounts, debit Cash, and credit Accounts Receivable/Maggie

D. debit Accounts Receivable/Maggie, credit Allowance for Doubtful Accounts, debit Accounts Receivable/Maggie, and credit Cash

Question 33 of 40

2.5 Points

No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause __________.

A. total assets to be overstated

B. total liabilities to be understated

C. net income to be understated

D. None of these are correct

Question 34 of 40

2.5 Points

As the past due time increases for an account, the likelihood of collecting that account __________.

A. usually goes up

B. usually goes down

C. stays the same

D. none of the above

Question 35 of 40

2.5 Points

Indy Sport and Hobby?s Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense __________.

A. includes a credit to the Bad Debt Expense account for $500

B. includes a debit to the Bad Debts Expense account for $900

C. includes a credit to the Bad Debts Expense account for $1,300

D. includes a debit to the Bad Debts Expense account for $500

Question 36 of 40

2.5 Points

Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 credit before adjustment, what is the Bad Debts Expense adjustment for the period?

A. $3,000

B. $600

C. $2,400

D. $3,600

Question 37 of 40

2.5 Points

A company uses the allowance method and expects to not collect $15,000 of sales. The journal entry to record the estimated bad debt is __________.

A.

Allowance for Doubtful Accounts	$15,000
Bad Debt Expense	$15,000

B.

Allowance for Doubtful Accounts	$15,000
Accounts Receivable	$15,000

C.

Accounts Receivable	$15,000
Allowance for Doubtful Accounts	$15,000

D.

Bad Debt Expense	$15,000
Allowance for Doubtful Accounts	$15,000

Question 38 of 40

2.5 Points

What type of account is an Allowance for Doubtful Accounts?

A. Asset

B. Contra-asset

C. Revenue

D. Contra-revenue

Question 39 of 40

2.5 Points

Empire has a credit balance of $750 in its Allowance for Doubtful Accounts. The balance in the Accounts Receivable account is $80,500, with $2,415 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to Bad Debt Expense will be __________.

A. $2,415

B. $3,165

C. $1,665

D. $750

Question 40 of 40

2.5 Points

A company receives a letter from a customer named Mary stating that she is bankrupt. The entry to write off her balance of $1,250 would be __________.

A.

Allowance for Doubtful Accounts	1,250
Accounts Receivable/Mary	1,250

B.

Accounts Receivable/Mary	1,250
Bad Debt Expense	1,250

C.

Bad Debt Expense	1,250
Allowance for Doubtful Accounts	1,250

D. none of the above

A02.V.4.2 Principles of Accounting I Lesson 5 Questions Question 1 of 40 2.5 Points In what category in a classified balance sheet is Accounts Receivable found? A. Plant and Equipment B. Current Liabilities C. Current Assets D. Owner's Equity Question 2 of 40 2.5 Points Net purchases + purchases returns and allowances + purchase discount equals __________. A. net loss B. net income C. gross profit D. gross purchases Question 3 of 40 2.5 Points The goods a company has available to sell to customers are called __________. A. supplies B. sales C. Cost of Goods Sold D. merchandise inventory Question 4 of 40 2.5 Points The contra-revenue accounts include __________. A. Sales Tax Payable B. Sales Returns and Allowances C. Sales Discount D. both B and C Beginning merchandise inventory would be found on the worksheet in the __________. A. income statement debit column B. income statement credit column C. balance sheet debit column D. balance sheet credit column Question 6 of 40 2.5 Points Beginning and ending inventories for Webster's Books are $9,000 and $6,000, respectively. The debit amounts (not including Income Summary. in the income statement columns of the worksheet total $14,000, and the credit amounts (not including Income Summary. total $15,500. The firm has a __________. A. net income of $1,500 B. net loss of $1,500 C. net loss of $3,000 D. net income of $3,000 An account never used in a service business is __________. A. Consulting Fees-Revenue B. Interest Payable C. Merchandise Inventory D. Accumulated DepreciationEquipment Question 8 of 40 2.5 Points Beginning inventory was $4,000, purchases totaled $22,000 and sales were $20,000. What is the ending inventory? A. $2,000 B. $4,000 C. $6,000 D. $8,000 Question 9 of 40 2.5 Points When completing a worksheet, __________. A. the ending inventory amount appears in the income statement debit column B. the beginning inventory amount appears in the adjustment credit column C. the ending inventory amount appears in the unadjusted trial balance debit column of the worksheet D. the beginning inventory amount appears in the balance sheet debit column of the worksheet Question 10 of 40 2.5 Points A contra-revenue account with a debit balance for returned goods is called __________. A. Sales Returns and Allowances B. Sales Discount C. the credit period D. the discount period Question 11 of 40 2.5 Points The beginning Merchandise Inventory account appears in the __________ on the worksheet. A. adjustment column B. trial balance and the balance sheet columns C. trial balance and adjustment columns D. all of the above Question 12 of 40 2.5 Points When using a periodic inventory method, what account is increased when you buy merchandise inventory? A. Cost of Goods Sold B. Beginning Inventory C. Ending Inventory D. Purchases Question 13 of 40 2.5 Points Net sales are __________. A. gross Sales + sales discounts + sales returns and allowances B. gross Sales - sales discounts - sales returns and allowances C. revenue - sales discounts + sales returns and allowances D. gross Sales + sales discounts - sales returns and allowances Question 14 of 40 2.5 Points Urban Camping sold goods for $200 to a charge customer. The customer returned $90 worth of goods for credit. Which entry is required to record the return transaction? A. debit Sales Returns and Allowances $90; credit Accounts Receivable $90 B. debit Sales Returns and Allowances $90; credit Sales $90 C. debit Sales $90; credit Sales Returns and Allowances $90 D. debit Accounts Receivable $90; credit Sales Returns and Allowances $90 Question 15 of 40 2.5 Points A characteristic of Sales Returns and Allowances is that __________. A. it has a debit balance B. it tracks returns from customers C. it is a contra-revenue account D. all of the above Question 16 of 40 2.5 Points The physical count of inventory was incorrect, which overstated the ending inventory. This would cause the __________. A. Cost of Goods Sold to be overstated B. Cost of Goods Sold to be understated C. gross profit to be understated D. net income to be understated Question 17 of 40 2.5 Points At the start of the year, Northern Lights had $8,000 worth of merchandise. What do we know about Northern Lights? A. It is a service business. B. It is a retail business. C. The company ended with a net income last year. D. The company ended with a net loss last year. Question 18 of 40 2.5 Points Which inventory appears in the balance sheet column of the worksheet? A. ending inventory B. beginning inventory C. combination of beginning and ending inventories D. none of the above Question 19 of 40 2.5 Points Customer returned merchandise for credit. This will be recorded with __________. A. a debit to an asset account B. a debit to a liability account C. a credit to an asset account D. None of these are correct Question 20 of 40 2.5 Points A classified balance sheet provides more information about the company to __________. A. owners B. creditors C. suppliers D. all of the above Question 21 of 40 2.5 Points Under the allowance method, Bad Debt Expense is recorded __________. A. as an estimate B. when an individual account is written of C. several times during the year as needed D. none of the above Question 22 of 40 2.5 Points The journal entry to write of an account judged to be uncollectible under the allowance would include a debit to __________. A. Sales B. Accounts Receivable C. Allowance for Doubtful Accounts D. Bad Debts Expense Question 23 of 40 2.5 Points A company writes of a specific account as uncollectible, but later the customer pays. The journal entry to record the reinstatement under the allowance method includes a(n. __________. A. increase to Cash B. decrease to Sales C. decrease to Allowance for Doubtful Accounts D. decrease to Bad Debts Expense Question 24 of 40 2.5 Points Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible. Barber calculates Bad Debts Expense using the __________. A. income statement approach B. direct write-of method C. balance sheet approach D. aging the Accounts Receivable approach Question 25 of 40 2.5 Points Net Realizable Value can be defined as __________. A. the Gross Accounts Receivable B. the Current Bad Debts Expense C. the amount of Accounts Receivable you do not expect to collect D. the Gross Accounts Receivable minus the Allowance for Doubtful Accounts Question 26 of 40 2.5 Points After having written of a customer under the direct write-of method, the account will be reopened when the customer __________. A. sends the full amount to pay of the account B. sends any amount to pay on their account C. pays the collection bureau D. none of the above Question 27 of 40 2.5 Points After aging the receivables, Tim's Toys estimates that $900 will not be collected, and the Allowance account has a debit balance of $325. The adjusting entry would be for __________. A. $575 B. $900 C. $1,225 D. $325 Question 28 of 40 2.5 Points At December 31, 2012, Brooke's Horse Stable's unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad Debts Expense __________. A. includes a debit to the Allowance account for $568 B. includes a credit to the Allowance account for $42 C. includes a debit to the Allowance account for $822 D. includes a credit to the Allowance account for $1,432 Question 29 of 40 2.5 Points The Allowance for Doubtful Accounts is adjusted __________. A. at the end of each accounting period B. each time a customer's debt is satisfied C. within one year of granting credit to a customer D. each time a customer is granted credit Question 30 of 40 2.5 Points If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write of a customer's account as uncollectible? A. Allowance for Doubtful Accounts B. Bad Debt Expense C. Accounts Payable D. Bad Debts Recovered Question 31 of 40 2.5 Points A detailed analysis of Accounts Receivable to determine how long each account has been outstanding is called __________. A. analyzing the Accounts Receivable B. aging the uncollectible accounts C. aging the Accounts Receivable D. taking a percentage of sales on account Question 32 of 40 2.5 Points Colleen's account was written of for $800. She received an inheritance from her uncle and wants to clear her account. The entry to record this is to __________. A. debit Cash and credit Accounts Receivable/Maggie B. debit Allowances for Doubtful Accounts, credit Accounts Receivable/Maggie, debit Cash, and credit Accounts Receivable/Maggie C. debit Accounts Receivable/Maggie, credit Allowance for Doubtful Accounts, debit Cash, and credit Accounts Receivable/Maggie D. debit Accounts Receivable/Maggie, credit Allowance for Doubtful Accounts, debit Accounts Receivable/Maggie, and credit Cash Question 33 of 40 2.5 Points No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause __________. A. total assets to be overstated B. total liabilities to be understated C. net income to be understated D. None of these are correct Question 34 of 40 2.5 Points As the past due time increases for an account, the likelihood of collecting that account __________. A. usually goes up B. usually goes down C. stays the same D. none of the above Question 35 of 40 2.5 Points Indy Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense __________. A. includes a credit to the Bad Debt Expense account for $500 B. includes a debit to the Bad Debts Expense account for $900 C. includes a credit to the Bad Debts Expense account for $1,300 D. includes a debit to the Bad Debts Expense account for $500 Question 36 of 40 2.5 Points Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 credit before adjustment, what is the Bad Debts Expense adjustment for the period? A. $3,000 B. $600 C. $2,400 D. $3,600 Question 37 of 40 2.5 Points A company uses the allowance method and expects to not collect $15,000 of sales. The journal entry to record the estimated bad debt is __________. A. Allowance for Doubtful Accounts Bad Debt Expense $15,000 $15,000 Allowance for Doubtful Accounts Accounts Receivable $15,000 $15,000 Accounts Receivable Allowance for Doubtful Accounts $15,000 $15,000 Bad Debt Expense Allowance for Doubtful Accounts $15,000 $15,000 B. C. D. Question 38 of 40 2.5 Points What type of account is an Allowance for Doubtful Accounts? A. Asset B. Contra-asset C. Revenue D. Contra-revenue Question 39 of 40 2.5 Points Empire has a credit balance of $750 in its Allowance for Doubtful Accounts. The balance in the Accounts Receivable account is $80,500, with $2,415 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to Bad Debt Expense will be __________. A. $2,415 B. $3,165 C. $1,665 D. $750 Question 40 of 40 2.5 Points A company receives a letter from a customer named Mary stating that she is bankrupt. The entry to write of her balance of $1,250 would be __________. A. Allowance for Doubtful Accounts Accounts Receivable/Mary 1,250 1,250 Accounts Receivable/Mary Bad Debt Expense 1,250 1,250 Bad Debt Expense Allowance for Doubtful Accounts 1,250 1,250 B. C. D. none of the above