Question : Multiple Choice Questions 24.If a company uses the periodic inventory system, : 1220474

Multiple Choice Questions

24.If a company uses the periodic inventory system, purchases of merchandise are  

A.debited to Merchandise Inventory.

B.credited to Merchandise Inventory.

C.debited to Purchases.

D.credited to Sales.

25.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.

26.Identify the statement below that is true regarding the Allowance for Doubtful Accounts account.  

A.The account has a normal credit balance and is reported on the balance sheet.

B.The account has a normal debit balance and is reported on the balance sheet.

C.The account has a normal credit balance and is reported on the income statement.

D.The account has a normal debit balance and is reported on the income statement.

27.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.

28.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.

29.During the year, Spirit Fun had net credit sales of $500,000. Past experience shows that 1.5 percent of the firm’s net credit sales result in uncollectible accounts. Determine the adjusting entry needed to recognize the estimated expense for these uncollectible accounts.  

A.debitAllowance for Doubtful Accounts $7,500 and credit Accounts Receivable $7,500.

B.debitUncollectible Accounts Expense $7,500 and credit Accounts Receivable $7,500.

C.debitUncollectible Accounts Expense $7,500 and credit Allowance for Doubtful Accounts $7,500.

D.debitUncollectible Accounts Expense $75,000 and credit Allowance for Doubtful Accounts $75,000.

30.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.

31.The adjusting entry to record accrued interest on a note payable requires a debit to  

A.Interest Income and a credit to Notes Payable.

B.Interest Payable and a credit to Interest Expense.

C.Interest Expense and a credit to Cash.

D.Interest Expense and a credit to Interest Payable.

32.On June 1, 2016, Mighty Fast Flooring issued a 10-month, 9 percent note for $4,000. The note was recorded in the Notes Payable-Trade account. The adjusting entry on December 31 to record the interest accrued (owed) on the note is:  

A.a debit to Interest Expense for $210 and a credit to Interest Payable for $210.

B.a debit to Interest Income for $210 and a credit to Interest Receivable for $210.

C.a debit to Interest Expense for $360 and a credit to Interest Payable for $360.

D.a debit to Interest Expense for $210 and a credit to Notes Payable-Trade for $210.

33.Allowance for Doubtful Accounts is reported in the  

A.Assets section of the balance sheet.

B.Operating Expenses section of the income statement.

C.Liabilities section of the balance sheet.

D.Cost of Goods Sold section of the income statement.