Question 2 The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles will increase income in the period it is collected. requires a correcting entry for the period in which the account was written oftf will decrease income in the period it is collected. O does not affect income in the period it is collected. Question 4 Accounts that normally have debit balances are assets, liabilities, and owner's drawings. assets, expenses, and owner's capital. assets, owner's drawings, and expenses. assets, expenses, and revenues. Question 5 The accounting for warranty costs is based on the conservatism concept. historical cost principle. O going concern principle. expense recognition principle Question 6 taxes do not provide workers with FICA life insurance. medical benefits. supplemental retirement. employment disability. Question 7 What is the impact on the financial statements if the adjusting entries for prepaid expenses are omitted? Balance sheet accounts are overstated and income statement accounts are understated. Balance sheet accounts are understated and income statement accounts are overstated Balance sheet accounts are understated and income statement accounts are understated. Balance sheet accounts are overstated and income statement accounts are overstated. Question 8 The purchase of supplies on account will result in a debit to Cash and a credit to Supplies. a debit to Accounts Payable and a credit to Supplies. a debit to Supplies and a credit to Accounts Payable. a debit to Supplies and a credit to Accounts Receivable. Question 9 A post-closing trial balance will contain only income statement accounts. nominal accounts temporary accounts. permanent accounts. Question 10 In a period of inflation, which cost flow method produces the highest net income? average-cost method LIFO method gross profit method FIFO method