Question : Multiple Choice Questions 31. Purchases of merchandise are A. debited to Merchandise Inventory. B. credited to : 1197570

Multiple Choice Questions

31. Purchases of merchandise are 

A. debited to Merchandise Inventory.

B. credited to Merchandise Inventory.

C. debited to Purchases.

D. credited to Sales.

32. On the financial statements prepared at the end of an accounting period, the merchandise inventory is shown as 

A. a liability on the balance sheet.

B. revenue on the income statement.

C. an asset on the balance sheet.

D. an addition to capital on the statement of owner’s equity.

33. With the accrual basis of accounting, it is appropriate to recognize revenue from a credit sale 

A. on the date of the sale.

B. on the date the account is collected in full.

C. each time a payment on an account balance is received.

D. either on the date of the sale or when the amount of the sale is collected.

34. After both of the entries for the inventory adjustment have been posted the debit in the Income Summary account represents: 

A. Net Income

B. Ending Inventory

C. Beginning Inventory

D. Cost of Goods Sold

35. Rose Bush Nursery purchased a delivery truck for $27,000. The truck is expected to have a useful life of 4 years and a residual value of $1,080. If the truck was purchased on June 1, 2013, what is the amount of depreciation expense for the truck for the year ended December 31, 2013? 

A. $3,780

B. $1,080

C. $6,480

D. $3,240

36. Stan Still Stationery Store’s employees are paid every Friday for a five day work week and are paid a total of $1,250 per day. If December 31, 2013, is on a Monday, the amount of the adjusting entry for accrued wages is: 

A. $1,250

B. $5,000

C. $6,250

D. $3,750

37. On October 1, 2013, a firm accepted a 4-month, 8% note for $12,000 from a customer with an overdue account balance. The accrued interest recorded for this note on December 31, 2013, is 

A. $960.00

B. $80.00

C. $240.00

D. No accrual is necessary

38. Allowance for Doubtful Accounts is 

A. subtracted from Accounts Receivable in the Assets section of the balance sheet.

B. deducted from Sales in the Revenue section of the income statement.

C. listed in the Operating Expenses section of the income statement.

D. listed in the Liabilities section of the balance sheet.

39. The adjusting entry for uncollectible accounts requires a debit to 

A. Allowance for Doubtful Accounts and a credit to Accounts Receivable.

B. Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.

C. Uncollectible Accounts Expense and a credit to Accounts Receivable.

D. Allowance for Doubtful Accounts and a credit to Uncollectible Accounts Expense.

40. Which of the following statements is not correct? 

A. Uncollectible Accounts Expense is a contra asset account.

B. The cost less the salvage value equals the depreciable base of a long-term asset.

C. Each adjustment for an accrued expense includes a credit to a liability account.

D. If a firm records prepaid expense items in an expense account when they pay for them, their adjustment at the end of the period to record the unexpired portion would include a debit to an asset account and a credit to an expense account.