Principles of accouting 1 ex 5

Question 1 of 40

2.5 Points

An account never used in a service business is __________.

A. Consulting Fees-Revenue

B. Interest Payable

C. Merchandise Inventory

D. Accumulated DepreciationEquipment

Question 2 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 3 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. Owners Equity

Question 4 of 40

2.5 Points

A wholesale customer returned merchandise having already paid for it within the cash discount period. The return will be recorded with __________.

A. a credit to an asset account

B. a credit to a liability account

C. a credit to Capital

D. none of the above

Question 5 of 40

2.5 Points

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

A. adjusted trial balance and balance sheet columns

B. adjustment column

C. adjustment, adjusted trial balance, and income statement columns

D. adjustment, adjusted trial balance, and balance sheet column

Question 6 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 7 of 40

2.5 Points

The information to prepare the Statement of Owners Equity comes from the __________.

A. income statement columns on the worksheet

B. adjustments columns on the worksheet

C. balance sheet columns on the worksheet

D. general ledger

Question 8 of 40

2.5 Points

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 9 of 40

2.5 Points

Beginning and ending inventories for Websters 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

Question 10 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 11 of 40

2.5 Points

In what category in a classified balance sheet is Mortgage Payable found?

A. Plant and Equipment

B. Current Liabilities

C. Long-term Liabilities

D. both B and C

Question 12 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 13 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 14 of 40

2.5 Points

Which amount does not change during the period and is added to purchases when computing the cost of goods available for sale?

A. beginning inventory

B. ending inventory

C. periodic inventory

D. freight-in

Question 15 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 16 of 40

2.5 Points

Cost of Goods Sold equals __________.

A. beginning inventory + net purchases + freight-in + ending inventory

B. beginning inventory - net purchases - freight-in + ending inventory

C. beginning inventory + net purchases + freight-in - ending inventory

D. beginning inventory - net purchases + freight-in + ending inventory

Question 17 of 40

2.5 Points

Merchandise sold on credit was returned for credit and recorded with a debit to Sales Returns and Allowances and a credit to Accounts Payable. This error will cause __________.

A. the net income for the period to be overstated

B. the net income for the period to be understated

C. the assets to be overstated

D. the liabilities to be understated

Question 18 of 40

2.5 Points

Which is true of the normal balance of an Income Summary?

A. The balance is debit.

B. The balance is credit.

C. The account does not have a normal balance.

D. It depends on which financial statement it appears.

Question 19 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 20 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 21 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 22 of 40

2.5 Points

Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to __________.

A. debit Allowance for Doubtful Accounts; credit Accounts Receivable

B. debit Sales; credit Allowance for Doubtful Accounts

C. debit Bad Debts Expense; credit Accounts Receivable

D. debit Allowance for Doubtful Accounts; credit Bad Debts Expense

Question 23 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 24 of 40

2.5 Points

Gross Accounts Receivable is $10,000. Allowance for Doubtful Accounts has a credit balance of $200. Net sales for the year are $150,000. In the past, 2% of sales had proved uncollectible, and an aging of the receivables indicates $1,200 is doubtful. Under the income statement approach, the Bad Debts Expense for the year is __________.

A. $1,000

B. $3,000

C. $2,800

D. $1,200

Question 25 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 26 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 27 of 40

2.5 Points

The Allowance for Doubtful Accounts is adjusted __________.

A. at the end of each accounting period

B. each time a customers debt is satisfied

C. within one year of granting credit to a customer

D. each time a customer is granted credit

Question 28 of 40

2.5 Points

Gross Accounts Receivable is $12,000. Allowance for Doubtful Accounts has a credit balance of $600. Net sales for the year are $100,000. In the past, 2% of sales had proved uncollectible, and an aging of the receivables indicates $1,900 as uncollectible. What would be the adjusted balance of the Allowance account under the balance sheet approach?

A. $2,000

B. $1,400

C. $2,500

D. $1,900

Question 29 of 40

2.5 Points

What would be the basis for the following journal entry if it appears on Travis Company records?

Allowance for Doubtful Accounts

150

Accounts ReceivableTim Morgan

150

A. The firm is estimating its uncollectible accounts.

B. The firm is writing off a specific account.

C. The firm is making a collection of a previously written-off account.

D. It is a reversing entry.

Question 30 of 40

2.5 Points

Which method uses an aging of Accounts Receivable to calculate the Bad Debts Expense?

A. income statement approach

B. balance sheet approach

C. aging the Accounts Receivable

D. direct write-off

Question 31 of 40

2.5 Points

Fit City estimates it will collect $2,300 of the $2,425 owed by customers. The difference of $125 represents the __________.

A. Gross Accounts Receivable

B. Allowance for Doubtful Accounts

C. Net Realizable Value

D. Value of the Current Unpaid Receivables

Question 32 of 40

2.5 Points

After aging the receivables, Tims 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 33 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 34 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

Question 35 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 36 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 customers account as uncollectible?

A. Allowance for Doubtful Accounts

B. Bad Debt Expense

C. Accounts Payable

D. Bad Debts Recovered

Question 37 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 38 of 40

2.5 Points

Harrys 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 39 of 40

2.5 Points

Miami Company uses Allowance for Doubtful Accounts. When Miami writes off an uncollectible account, there is a(n. __________.

A. decrease in Accounts Receivable

B. decrease in expense

C. increase in net income

D. none of the above

Question 40 of 40

2.5 Points

At December 31, 2012, Brookes Horse Stables 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