1. Jackson purchased $500 of goods and received credit terms of 2/10, n/30. How much did he pay if payment was made during the discount period? a. $450 b. $510 c. $500 d. $490
2.The entry to record a payment on a $600 account within the 2% discount period would include a: a. debit to accounts payable for $588 b. debit to accounts payable for $600 c. credit to purchase for $588 d. debit to cash for $600
3. Medeco bought goods for $250 on credit. Medeco returned $50 worth of goods. Terms of the sale were 2/10, n/30. If medeco pays the amount owed within the discount period, what is the amount they should pay? a. $250 b. $204 c. $196 d. $200
4. When using a periodic inventory method, what account is increased when you buy merchandise inventory? a. cost of goods sold b. beginning inventory c. ending inventory d. purchases
5. Beginning inventory was $4,000, purchases totaled $22,000 and sales were $20,000. What is the ending inventory? a. $2,000 b. $4,000 c. $6,000 d. $8,000
6. Which is true of the normal balance of an Income Summary? a. The balance is debit b. The balance is credit c. The account does not have a normal balance d. It depends on which financial statement it appears
7. The goods a company has available to sell to customers are called: a. supplies b. sales c. costs of goods sold d. merchandise inventory
8. Which amount does NOT change during the period and is added to purchases when computing the cost of goods available for sale?
a. Beginning inventory b. Ending inventory c. Periodic inventory d. Freight-in
9. An account never used in a service business is: a. Consulting Free-Revenue b. Interest Payable c. Merchandise Inventory d. Accumulated Depreciation-Equipment
10. At the start of the year, Northern Lights had $8,000 worth of merchandise. What do we know about Northern Lights? a. It is a service business b. It is a retail business c. The company ended with a net income last year. d. The company ended with a net loss last year.
11. The physical count of inventory was incorrect, which overstated the ending inventory. This would cause the : a. cost of goods sold to be overstated b. cost of goods sold to be understated c. gross profit to be understated d. net income to be understated
12. which inventory appears in the balance sheet column of the worksheet? a. ending inventory b. beginning inventory c. combination of beginning and ending inventories d. none of the above
13. Beginning merchandise inventory would be found on the worksheet in the: a. income statement debit column b. income statement credit column c. balance sheet debit column d. balance sheet credit column
14. the ending Merchandise Inventory account appears in the (blank) on the worksheet a. adjusted trail balance and balnace sheet columns b. adjustment column c. adjusted trail balances and income statement columns d. adjustment adjusted trail balance and balance sheet column
15. Miami Company uses Allowance for Doubtful Accounts. When Miami writes off an uncollectible account, there is a(n) a. decrease in Acciunts Receivable b. decrease in expense c. increase in net income d. none of the above
16. No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause. a. total assets to be overstated b. total liabilities to be understated c. net income to be understated d. none of these are correct
17. If the allowance method of accounting for uncollectible receivable is used, what general ledger account is debited to write off a customers account as uncollectible? a. Allowance for Doubtful accounts b. Bad debt Expense c. Accounts Payable d. Bad Debts Recovered
18. The journal entry to write off an account judged to be uncollectible under the allowance would include a debit to:
a. Sales b. Accounts Receivable
c. Allowance for Doubtful Accounts d. Bad Debts Expense
19. After having written off a customer under the direct write-off method, the account will be reopened when the customer: a. sends the full amount to pay off the account b. sends any amount to pay on their account c. pays the collection bureau d. none of the above
20. As the past due time increase for an account, the likelihood of collecting that accounts: a. usually goes up b. usually goes down c. stays the same d. none of the above
21. Which method uses an aging of Accounts Receivable to calculate the Bad debt Expense?
a. Income statement approach b. Balance sheet approach c. Aging the accounts Receivable d. Direct write-off