In a perpetual inventory system, the Merchandise Inventory account is updated:
A) when merchandise is sold.
B) at the end of the period.
C) when merchandise is purchased.
D) All of the above are correct
Ending inventory:
A) increases Cost of Goods Sold.
B) decreases Cost of Goods Sold.
C) does not affect Cost of Goods Sold.
D) increases Sales.
Jenny’s Accessories bought 50 necklaces for $10 each on account. The invoice included
a 2% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned
prior to payment. The entry to record the return would include:
A) a debit to Accounts Payable for $50.00.
B) a debit to Accounts Payable for $51.00.
C) a debit to Purchases Returns and Allowances for $50.00.
D) a debit to Purchases Returns and Allowances for $51.00.
Beginning inventory was $3,000, purchases totaled $20,000 and sales were $17,000.
What is the ending inventory? Assume gross profit is $0.
A) $2,000
B) $4,000
C) $6,000
D) $8,000
When the balance in the Income Summary account is a credit, the company has:
A) incurred a net loss.
B) incurred a net income.
C) had more expenses than revenue.
D) no owner withdrawals during the period.
Town and Country Saddle learns the account receivable for a customer is uncollectible.
The journal entry under the allowance method to write-off an account is to:
A) debit Allowance for Doubtful Accounts; credit Bad Debts Expense
B) debit Sales; credit Allowance for Doubtful Accounts.
C) debit Bad Debts Expense; credit Accounts Receivable.
D) debit Allowance for Doubtful Accounts; credit Accounts Receivable.
Myra’s balance of Accounts Receivable is $4,000. The balance of the Allowance
account is $600 credit. Myra writes off a $150 uncollectible account. The effect on net
realizable value of the receivables is that it:
A) reduces net realizable value.
B) increases net realizable value.
C) is unchanged.
D) is undeterminable.
When calculating the employer’s payroll tax expense, the clerk forgot about the wage
base limits. This will cause:
A) the expenses to be overstated.
B) the assets to be overstated.
C) the liabilities to be overstated.
D) Both A and C are correct.