Reference no: EM132793291

Problem 1: When merchandise is acquired on account and the perpetual system of inventory is used, the journal entry for the purchase would include

a. debiting Merchandise Inventory and crediting Accounts Payable.
b. debiting Accounts Payable and crediting Purchases.
c. debiting Accounts Payable and crediting Merchandise Inventory.
d. debiting Purchases and crediting Accounts Payable.

Problem 2: The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called

a. FIFO.
b. perpetual.
c. LIFO.
d. periodic.

Problem 3: Accountants argue that which of the following approaches to estimating Allowance for Bad Debts provides a realistic estimate of the net receivables?

a. analyzing the sales on account
b. taking a percentage of revenue
c. taking a percentage of net sales
d. aging the accounts receivable

Problem 4: Under the allowance method, to write off an account that has been determined to be uncollectible, the entry would include

a. debiting Allowance for Bad Debts and crediting Bad Debt Expense.
b. debiting Allowance for Bad Debts and crediting Accounts Receivable.
c. debiting Bad Debt Expense and crediting Allowance for Bad Debts.
d. debiting Accounts Receivable and crediting Allowance for Bad Debts.