A company using the perpetual inventory system purchased inventory worth $550,000 on account with credit terms of 2/15, n/45. Defective inventory of $70,000 was returned 3 days later, and the accounts were appropriately adjusted If the company paid the invoice 25 days later, the journal entry to record the payment would be ________. A) $550,000 […]
The consistency principle states that businesses should report the same amount of ending merchandise inventory from period to period. Indicate whether the statement is true or false ANSWER FALSE
What does “2/10” mean, with respect to “credit terms of 2/10, n/30”? A) A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date. B) Interest of 2 percent will be charged if the invoice is paid after 10 days from the date on the invoice. […]
A company that uses the perpetual inventory system purchases inventory for $63,000 on account, with terms of 2/10, n/30. Which of the following is the journal entry to record the payment made within 10 days? A) a debit to Accounts Payable for $63,000, a credit to Cash for $61,740, and a debit to Merchandise Inventory […]
Kittery Services, Inc. purchased computers that are to be used in its consultancy services. Based on the matching principle, the related account that should appear on the income statement for the year ended December 31, 2016 is ________. A) Depreciation Expense B) Service Revenue C) Accumulated Depreciation D) Equipment Expense ANSWER A
Harvard Financial Services, Inc. purchased computers that are to be used in its consultancy services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2016? A) Depreciation Expense B) Service Revenue C) Accumulated Depreciation D) Equipment Expense ANSWER C
As a part of the closing process, revenues and expenses may be closed to a temporary account called the Net Income (Loss) account. Indicate whether the statement is true or false ANSWER FALSE
A company is uncertain whether a complex transaction should be recorded as gain or loss. Under the conservatism principle, it should choose to treat it a loss. Indicate whether the statement is true or false ANSWER TRUE
In the closing process, the Dividends account is closed to the Retained Earnings account. Indicate whether the statement is true or false ANSWER TRUE
A posting reference column is used ________. A) while preparing the trial balance using the ledger B) when the information is transferred from the journal to the ledger C) when the information is transferred from the ledger to the post-closing trial balance D) while preparing the balance sheet using the trial balance ANSWER B
