11) Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would: A) debit Merchandise Inventory and credit Cost of Goods Sold. B) debit Cost of Goods Sold and credit Merchandise Inventory. C) debit Sales and credit Cost of Goods Sold. D) debit Purchases and credit Cost of Goods Sold.   12) A credit customer purchased $450 worth of items. Two days later, the customer returned $300 worth of those items. The entry to record this under the perpetual inventory method would include: A) a debit to […]

  61) When the adjustment is made for depreciation, both the Depreciation Expense account and Accumulated Depreciation account are increased.   62) The amount of supplies used causes a decrease in Supplies and an increase in expense.   63) Unearned Revenue is a liability account used to record rent fees received in advance.   64) The amount for beginning inventory is needed when calculating Cost of Goods Sold.   65) Under the periodic inventory system, an adjustment is not made on the worksheet for inventory. 66) The beginning inventory is adjusted by crediting Merchandise Inventory and debiting Income Summary.   […]

  41) In what category in a classified balance sheet is Mortgage Payable found? A) Plant and Equipment B) Current Liabilities C) Long-term Liabilities D) Both B and C are correct.   42) The left and right columns on the financial statements are used for debits and credits.   43) The amount for Cost of Goods Sold is found on the worksheet.   44) Land is listed first under Plant, Property and Equipment.   45) The formal income statement can be prepared from the income statement columns of the worksheet.   46) Gross profit minus Operating Expenses equals Net Income. […]

  13.4   Learning Objective 13-4   1) No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause: A) total assets to be overstated. B) total liabilities to be understated. C) net income to be understated. D) None of these are correct. 2) The journal entry to write off an account judged to be uncollectible under the allowance would include a debit to: A) Sales. B) Accounts Receivable. C) Allowance for Doubtful Accounts. D) Bad Debts Expense.   3) Town and Country Saddle learns the account receivable for […]

21) Mr. Generous donated $100,000 to Excel Private School and specified that the principal amount not be spent but be maintained permanently. Interest on the invested funds can be used to award scholarships to those who excel in drama. How should the $100,000 contribution be presented on Excel Private School's financial statements? A) As a direct increase in net assets of the endowment fund B) As revenue of the operating fund C) As revenue of the endowment fund D) As deferred revenue of the operating fund 22) Sydney won a lottery and made a $500,000 endowment contribution to his alma […]