The following is Multiple Choice

1. The Fastbank Motorcycle Company (FMC) receives a $10 million order from dealers wanting to buy its most popular model on credit. No money changes hands. Due to excess demand, FMC cannot supply the motorcycles until next quarter. How will these events affect the balance sheet?

a) Accounts Receivable will increase by $10 million this quarter and Inventories will decrease next quarter.b) Both Accounts Receivable and Accounts Payable will increase by $10 million this quarter.c) These events will not impact the balance sheet this quarter.d) Both Accounts Receivable and Shareholders' Equity will increase by $10 million this quarter.

2.The Fastbank Motorcycle Company (FMC) receives a $10 million order from dealers wanting to buy its most popular model on credit. No money changes hands. Due to excess demand, FMC cannot supply the motorcycles until next quarter. How will these events affect the balance sheet? a) Accounts Receivable will increase by $10 million this quarter and Inventories will decrease next quarter. b) Both Accounts Receivable and Accounts Payable will increase by $10 million this quarter. c) These events will not impact the balance sheet this quarter. d) Both Accounts Receivable and Shareholders' Equity will increase by $10 million this quarter.

3. This month, Grass is Greener Lawn Service pays cash for $4,000 of grass fertilizer to be used two months from now. What journal entry will Grass is Greener record this month?

a) Debit retained earnings for $4,000 and credit accounts payable for $4,000. b) Debit supplies for $4,000 and credit cash for $4,000. c) Debit cash for $4,000 and credit supplies expense for $4,000. d) Debit supplies expense for $4,000 and credit accounts payable for $4,000.