61) What type of account is Prepaid rent and what is its normal balance? A) Expense and debit B) Liability and credit C) Revenue and credit D) Asset and debit 62) What is the term for the difference between the Equipment account and the Accumulated depreciation  account? A) Contra asset B) Market value C) Historical cost D) Book value 63) A company received $5,000 for 100 one-year subscriptions on July 1.  The journal entry to record this cash receipt would include a: A) debit to Unearned revenue. B) debit to Prepaid expenses. C) credit to Unearned revenue. D) credit to […]

11) For Accounts receivable, the category of account and its normal balance are: A) Stockholders' equity and a credit balance. B) Assets and a debit balance. C) Liabilities and a credit balance. D) Assets and a credit balance. 12) For Accounts payable, the category of account and its normal balance are: A) Stockholders' equity and a credit balance. B) Assets and a debit balance. C) Liabilities and a credit balance. D) Assets and a credit balance. 13) For Cash, the category of account and its normal balance are: A) Assets and a debit balance. B) Liabilities and a credit balance. […]

11) A business pays $500 cash for supplies. Which account is debited? A) Cash B) Accounts payable C) Supplies D) Service revenue 12) A business pays $500 cash for supplies. Which account is credited? A) Cash B) Accounts payable C) Supplies D) Service revenue 13) A business buys $500 of supplies on account. Which account is debited? A) Cash B) Accounts payable C) Supplies D) Service revenue 14) A business buys $500 of supplies on account. Which account is credited? A) Cash B) Accounts payable C) Supplies D) Service revenue 15) A business makes a cash payment to a supplier […]

31) Using the perpetual inventory system, discounts taken on an invoice, such as 3/10, n/30, would be: A) debited to Inventory. B) credited to Inventory. C) debited to Cost of goods sold. D) credited to Cost of goods sold. 32) When a company ships goods to a customer and pays for freight out, how is that cost recorded? A) As an operating expense B) As an addition to the cost of inventory C) As a reduction of sales revenue D) As an addition to cost of goods sold 33) A company has purchased inventory and receives an invoice that indicates […]

21) Michelin Jewelers completed the following transactions.  Michelin Jewelers uses the perpetual inventory system.  On April 2, Michelin sold $9,000 of merchandise to a customer on account with terms of 3/15, n/30.   Michelin's cost of the merchandise sold was $5,500. Which of the following journal entries correctly records the Sales revenue? A) Sales revenue 9,000      Accounts receivable 9,000 B) Sales revenue 9,000      Cost of goods sold 9,000 C) Cash 9,000      Sales revenue 9,000 D) Accounts receivable 9,000      Sales revenue 9,000 22) Michelin Jewelers completed the following transactions.  Michelin Jewelers uses the perpetual inventory system.  On April […]