Reference no: EM13926614

1. The Sales Returns and Allowances

A) account is presented on the balance sheet as a deduction from Accounts Receivable.
B) on the income statement as a deduction from Sales.
C) on the income statement as an addition to Sales.
D) on the balance sheet as a deduction from Capital.

2. If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were

A) $54,000.
B) $50,000.
C) $46,000.
D) $4,000.

3. The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes:

A) a debit to Return Expense and a credit to Accounts Receivable.
B) a debit to Sales and a credit to Sales Returns and Allowances.
C) a debit to Sales Returns and Allowances and a credit to Accounts Receivable.
D) a debit to Accounts Receivable and a credit to Sales Returns and Allowances.

4. 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.

5. On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $800.
B) $1,000.
C) $1,200
D) $200

6. When the allowance method of recognizing losses from uncollectible accounts is used, the entry to record the write-off ofa specific account consists of

A) a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.
B) a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
C) a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
D) a debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.

7. A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $1,200
B) $1,500
C) $1,800
D) $3,0008.

8. When a firm uses the allowance method to provide for losses, the collecting of an account previously written off as uncollectible requires an entry

A) to reinstate the account receivable.
B) to increase the balance of the Sales account.
C) to reduce the balance of Uncollectible Accounts Expense.
D) to decrease the balance of the Allowance for Doubtful Accounts.

9. On December 31, prior to adjustments, the balance of Accounts Receivable is $16,000 and Allowance for Doubtful Accounts has a credit balance of $95. The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $705.
B) $800.
C) $895.
D) $95.

10. The adjusting entry to record accrued interest on a note receivable requires

A) a debit to Interest Income and a credit to Notes Receivable.
B) a debit to Interest Receivable and a credit to Interest Revenue.
C) a debit to Interest Revenue and a credit to Cash.
D) a debit to Interest Revenue and a credit to Interest Receivable.

11. When a company issues a promissory note, the accountant records an entry that includes a credit to Note Receivable for

A) the face value of the note.
B) the face value of the note plus the interest that will accrue.
C) the face value less the interest that will accrue.
D) the maturity value of the note.

12. How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year (based on a 360 day year)?

A) $300
B) $1,800
C) $450.
D) $900.

13. Notes payable which are to be satisfied with current assets and are due within one year are usually shown

A) in the Current Assets section of the balance sheet.
B) in the Current Liabilities section of the balance sheet,
C) in the Other Expenses section of the income statement.
D) in the Long-Term Liabilities section of the balance sheet.

14. Upon collection of the amount due on a $6,000 face value, 90-day note with interest at 10 percent a year, the Note Receivable account is

A) debited for $6,600.
B) credited for $6,000.
C) credited for $6,150.
D) debited for $6,000.

15. The balance sheet shows

A) the results of business operations.
B) all revenues and expenses.
C) the amount of net income or loss.
D) the financial position of a business at a given time.

16. Amounts that a business must pay in the future are known as

A) accounts receivable.
B) accounts payable.
C) stock.
D) expenses.

17. Examples of assets are

A) cash and accounts receivable.
B) cash and revenue.
C) cash and rent expense.
D) investments by the owner and revenue.

18. A net loss results

A) when expenses are greater than revenue.
B) when assets are greater than liabilities.
C) when revenue is greater than expenses
D) when expenses are greater than assets.

19. The income statement shows

A) the financial position of a business on a specific date.
B) revenue and stockholders' equity.
C) the results of operations for a period of time.
D) the total value of the business.

20. If liabilities are $4,000 and stockholders' equity is $15,000, assets are

A) $9,000.
B) $15,000.
C) $19,000
D) $4,000

21. Assets and liabilities are reported on

A) the balance sheet.
B) the income statement.
C) the statement of stockholders' equity.
D) both the balance sheet and the income statement.

22. The rent paid for future months is a (n)

A) asset.
B) liability.
C) expense.
D) revenue.

23. Credits are used to record

A) decreases in assets and stockholders' equity and increases in liabilities.
B) decreases in assets, liabilities, and stockholders' equity.
C) decreases in liabilities and increases in assets and stockholders' equity.
D) increases in liabilities and stockholders' equity.

24. Debits are used to record increases in

A) assets and revenue
B) revenue and stockholders' equity.
C) assets and expenses.
D) assets and liabilities.

25. A firm paid cash to apply against a debt. To record this transaction, the accountant would

A) debit Accounts Receivable and credit Cash.
B) debit Accounts Payable and credit Cash.
C) debit Cash and credit Accounts Payable.
D) Debit Cash and credit Accounts Receivable.

26. When charge customers pay cash to apply against their accounts, the amount is recorded

A) on the debit side of the Cash account and the credit side of the Fees Income account.
B) on the debit side of the Accounts Payable account and the credit side of the Cash account.
C) on the debit side of the Cash account and the credit side of the Accounts Receivable account.
D) on the debit side of the Accounts Receivable account and the credit side of the Cash account.

27. The account used to record increases in stockholders' equity from the sale of goods or services is

A) the revenue account.
B) the Cash account.
C) the stock account.
D) the dividends account.

28. Which of the following types of accounts normally have debit balances?

A) assets and revenue.
B) assets, liabilities, and stockholders' equity.
C) expenses and assets.
D) liabilities and Stockholders' equity.

29. Which of the following groups contain only accounts that normally have credit balances?

A) accounts receivable and fees income.
B) salaries expense and accounts payable.
C) fees income and stock.
D) accounts payable and equipment.

30. The journal entry to record the sale of services on credit should include

A) debit to Accounts Receivable and a credit to Stock.
B) a debit to Cash and a credit to Accounts Receivable.
C) a debit to Fees Income and a credit to Accounts Receivable.
D) a debit to Accounts Receivable and a credit to Fees Income