Question 1-10 multiple choice.

1. Losses are asset expirations which are incurred voluntarily to produce revenue.

A. True

B. False

2. If the debit subtotal of the Income Statement on the work sheet is $159,000 and the credit subtotal is $147,000, there is a:

• A. net income of $12,000.

• B. net loss of $12,000.

• C. net loss of $159,000.

• D. net income of $147,000.

3. In adjusting and closing the books of Sally Smith Company at the end of the fiscal year, no provision was made for accrued sales salaries expense of $600. The effect of this omission was as follows:

• A. the assets on the balance sheet were the same regardless of the omission.

• B. stockholders equity on the balance sheet is understated by $600.

• C. the liabilities reported on the balance sheet are overstated by $600.

• D. net income for the year was understated by $600.

• E. None of the preceding answers is correct.

4. The Trial Balance columns of the work sheet show store fixtures of $4,000. Estimated depreciation for the period is $400. The Store Fixtures amount in the Balance Sheet columns of the work sheet will be a:

• A. $3,600 debit.

• B. $3,600 credit.

• C. $4,400 debit.

• D. $4,000 debit.

• E. $4,000 credit.

5.

One of the reasons for recognizing revenue at the time of sale is that the risk of loss due to price decline or destruction of the goods is passed to the buyer.

A. True

B. False

6. Which of the following statements is false?

• A. Inclusion of special journals and subsidiary ledgers increased the efficiency of the manual accounting system.

• B. Microcomputers were used for accounting functions before mainframe computers.

• C. Even if special journals are used, the general journal is used.

• D. Many accounting software packages are relatively inexpensive (under $500)

7.

The percentage-of-completion method recognizes revenue at the point of sale.

A. True

B. False

8. Supplies on Hand are shown as $315 in the Trial Balance columns of the work sheet. The Adjustments columns show that $290 of these supplies were used during the month. The amount shown as Supplies on Hand in the Balance Sheet columns is a:

• A. $25 debit.

• B. $315 debit.

• C. $290 debit.

• D. $25 credit.

• E. $290 credit.

9. Office Supplies on Hand shows up on the work sheet in the following columns, assuming office supplies expense must be deducted from the prepaid amount.

• A. Trial Balance, Adjustments, Adjusted Trial Balance, and Balance Sheet.

• B. Income Statement and Adjustments.

• C. Balance Sheet and Adjustments.

• D. Balance Sheet and Income Statement.

10.

The practice of conservatism tends to understate rather than overstate net assets and net income.

A. True

B. False