Accounting Multiple Choice Question Answers

1.Which of the following account would normally be found on the income statement?

1. Unearned service revenue
2. Rent payable
3. Sales returns and allowances
4. Cash

2. Which of the following would best determine a small theft of inventory by employee?

1. A physical count of inventory when using the periodic inventory method

2. A physical count of inventory when using the perpetual inventory method

3. An analysis of the gross margin percentage when using the periodic inventory method

4. An analysis of the gross margin percentage when using the perpetual inventory method

3.HVAC company has the following account balance: sales revenue$50000, sales returns and allowance $1000, sales discounts $1200 and bad debts $200, given these balance, the amount of net sales is

1. $50000

2. $49000

3. $47800

4. $47600

4.Noland Corporation sells food wholesale, on January 15, Noland sold 100 cases of beans to revenge, Inc. for $3 per case with terms of 2/10,n/30. On January 22, revenge,inc paid Nolan the full amount due. Given this information, the entry to record the collection of cash by Nolan Corporation on January 22 would include and increase to

a. Cash of $294

b. Accounts receivable of $300

C cash of $300

D account receivable of$ 294

1. ice,inc. sold $8000 of merchandise to Defrosts Co. with term 2/10,n/30. If Defrost paid for one-half the merchandise within the discount period and on-half after the discount period, Defrost paid a total of:

a. $7840

B$7880

c. $7920

d. $7960

6.the direct write-off method of accounting for bad debts:

A. Often fails to match bad debt losses with sales for the same period

B.is subject to a significant amount of estimation error

c. Causes accounts receivable to appear on the balance sheet at their estimated not realizable value

d. Requires that losses from bad debts be recorded in the period in which sales are made.

7. The direct charge-off (aka direct write-off) method:

a. Results in a better matching of costs with revenues than the allowance method

B.is more precise than the allowance method

c. Is the only acceptable method allowed under generally accepted accounting principles?

D.is used only by large companies

8. Allowance for bad debts is an example of an

a. Expense account

b. Contra account

c. Adjunct account

d. Control account

9.the two methods of accounting for bad debts are the direct charge-off( aka direct write off) method and the allowance method. When comparing the two, which of the following is true?

a. The direct write-off method is exact and also better illustrates the matching

b. The allowance method is less exact but it better illustrates the matching principle

c. The direct write-off method is theoretically superior