Reference no: EM133110522
Questions -
Q1. The following balances were reported by Nagpapangap Company on December 31, 2020 and 2019: 2020: Accounts payable - P3,500,000; Notes payable - P4,000,000 2019: Accounts payable - P2,500,000; Notes payable - P1,500,000 On July 1, 2020, the company issued a one-year, 12% note for a bank loan of P1,000,000. All other notes payable arose from purchases of merchandise. Total payment to suppliers in 2020 amounted to P11,000,000, after purchase discount of P250,000. During 2020, company returned defective merchandise costing P500,000. What is the amount of gross purchases for 2020 under the accrual basis?
a. P14,250,000
b. P18,250,000
c. P11,000,000
d. P12,450,000
Q2. It is where income is recognized when earned regardless when received and expense is recognized when incurred regardless when it is paid.
a. Cash basis
b. Double entry
c. Accrual basis
d. Single entry
Q3. It is where income is recognized when received regardless when earned and expense is recognized when paid regardless when it is incurred.
a. Double entry
b. Single entry
c. Cash basis
d. Accrual basis
Q4. Before 2020, KnowieNowl Company used the cash basis of accounting. For the year ended December 31, KnowieNowl changed to the accrual basis. KnowieNowl cannot determine the beginning balance of supplies inventory. What effect of KnowieNowl's inability to determine beginning supplies inventory on its 2020 accrual basis profit and December 31, 2020 accrual basis capital, respectively?
a. overstated; no effect
b. overstated; overstated
c. no effect; overstated
d. no effect; no effect
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