CHOOSE THE CORRECT ANSWER

25.Acquisition of inventory on cash basis

DEBIT Inventory CREDIT Accounts payable

DEBIT Expense CREDIT Cash

DEBIT Inventory CREDIT Cash

DEBIT Cost of sales CREDIT Cash

26.Acquisition of inventory on credit.

DEBIT Inventory CREDIT Accounts payable

DEBIT Accounts payable CREDIT Inventory

DEBIT Accounts payable CREDIT Cash

DEBIT Cost of sales CREDIT Accounts payable

27.Payment (settlement) of accounts payable

DEBIT Inventory CREDIT Accounts payable

DEBIT Cash CREDIT Accounts payable

DEBIT Accounts payable CREDITCash

DEBIT Cost of sales CREDIT Inventory

28.Sale of inventory on cash basis

DEBIT Inventory CREDIT Sales

DEBIT Cash CREDIT Accounts receivable

DEBIT Cash CREDIT Sales

DEBIT Cost of sales CREDIT Cash

29.Sale of inventory on credit

DEBIT Cost of sales CREDIT Sales

DEBIT Cash CREDIT Accounts receivable

DEBIT Cash CREDIT Sales

DEBIT Accounts receivable CREDIT Sales

30.Collection of accounts receivable

DEBIT Cost of sales CREDIT Sales

DEBIT Cash CREDIT Accounts receivable

DEBIT Cash CREDIT Sales

DEBIT Accounts receivable CREDIT Sales

31.Payment of advertising expense

DEBIT Advertising expense CREDIT Cash

DEBIT Cash CREDIT Advertising expense

DEBIT Cash CREDIT Advertisement payable

DEBIT Advertising expense CREDIT Accounts payable

32.Owner's drawings (owner's withdrawal of cash from the business)

DEBIT Drawings expense CREDIT Cash

DEBIT Cash CREDIT Owner's drawings

DEBIT Owner's drawings CREDIT Cash

DEBIT Cash CREDIT Owner's capital

33.Which of the following statements is correct?

The "Sales" account is used by both service and merchandising businesses in recording revenues from primary business activities.

"Accounts receivable" is used only by service businesses but not by merchandising businesses.

The "Inventory" account is most likely to be found in the financial statements of a merchandising or manufacturing business but not of those of a service business.

A manufacturing business cannot be organized as a sole proprietorship.

34.Recording assets at their acquisition cost (entry value), rather than at their net selling price (exit value), is in line with the concept of

Single entity concept.

Historical cost concept.

Going concern concept.

Matching principle.