On a bank reconciliation, deposits in transit are O (no answer) deducted from the bank balance. deducted from the book balance. .. added to the bank balance. added to the book balance. 22. Under the LCM (lower-of-cost-or-market) approach, the market value is defined as O(no answer) current replacement cost. FIFO cost. selling price. LIFO cost. 2 point(s) Which of the following reflect the balances of prepayment accounts prior to adjustment? O (no answer) Balance sheet accounts are understated and income statement accounts are understated. Balance sheet accounts are overstated and income statement accounts are overstated. Balance sheet accounts are overstated and income statement accounts are understated. Balance sheet accounts are understated and income statement accounts are overstated. 24. In which journal would a cash purchase of inventory be recorded? O(no answer) Cash payments journal None of these Purchase journal General journal 2 point(s) Gross profit does not appear O(no answer) on a single-step income statement. to be relevant in analyzing the operation of a merchandiser. on a multiple-step income statement. on the income statement if the periodic inventory system is used because it cannot be calculated. 26. The cost principle requires that when assets are acquired, they be recorded at O(no answer) appraisal value. market price. book value. cost. 2 point(s) After gross profit is calculated, operating expenses are deducted to determine O (no answer) gross profit on sales. O gross margin. net income. 30. Cost of goods sold is determined only at the end of the accounting period in net margin. (no answer) a perpetual inventory system. neither a perpetual nor a periodic inventory system. both a perpetual and a periodic inventory system. a periodic inventory system. 2 point(s) Which account below is not a subdivision of owner's equity? O(no answer) Revenues Expenses Drawings Liabilities 32. Which of the following statements is not true? O(no answer) Expenses decrease owner's equity. Expenses increase owner's equity. Expenses are a negative factor in the computation of net income. Expenses have normal debit balances. 2 point(s)