ACCT300 week 2 quizQuestion 1 of 20Merchandise inventory shrinkage will increase Merchandise Inventory.A. True B. FalseQuestion 2 of 20East, Inc. had beginning inventory of $10,000, purchases of $25,000, and ending inventory of $5,000. What is Eastâs cost of merchandise sold? A.$10,000 B.$25,000 C.$5,000 D.$30,000Question 3 of 20Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of capital stock. How does this transaction affect Eagle Eyeâs accounts? A.Increase in stock expense and decrease cash by $6,000 each B.Increase capital stock and increase cash by $6,000 each C.Increase capital stock and increase revenue by $6,000 each D.Increase capital stock and decrease retained earnings by $6,000 eachQuestion 4 of 20Which of the following accounts would likely be included in a deferral adjusting entry? A.Interest Revenue B.Unearned Revenue C.Salaries Payable D.Accounts ReceivableQuestion 5 of 20If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.A. True B. FalseQuestion 6 of 20The __________ is prepared with various sections, subsections, and captions that aid in its interpretation and analysis. A.accounting equation B.retained earnings statement C.intangible asset section D.classified balance sheet Question 7 of 20Under the cash basis of accounting, expenses are recorded when paid.A. True B. FalseQuestion 8 of 20Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? A.As a revenue B.As the cost of merchandise sold C.It does not appear on the balance sheet D.As a current assetQuestion 9 of 20Which of the following statements is true?A.The revenue activities of a service business involve providing services to customers. B.The revenue activities of a merchandising business involve the building of a product. C.The revenue activities of a service business involve the building of a product. D.The revenue activities of a merchandising business involve providing services to customers.Question 10 of 20The credit terms of a sale are normally indicated on a(n): A.purchase order. B.invoice. C.bill of lading. D.check.Question 11 of 20Merchandise inventory shrinkage will decrease Retained Earnings.A. True B. FalseQuestion 12 of 20Using accrual accounting, expenses are recorded and reported only:A.when they are incurred, whether or not cash is paid. B.when they are incurred and paid at the same time. C.if they are paid before they are incurred. D.if they are paid after they are incurred.Question 13 of 20Sales discounts are granted by the seller to customers for payment at the end of the month.A. True B. FalseQuestion 14 of 20The accrual basis of accounting requires revenue to be recorded when the service is performed.A. True B. FalseQuestion 15 of 20On April 1, Bear, Inc. paid $2,400 for an insurance premium on a three-year insurance policy. At the end of December, Bearâs fiscal year-end, what should be the balance in the prepaid insurance account? A.$2,700 B.$3,000 C.$2,400 D.$1,800Question 16 of 20Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.A. True B. FalseQuestion 17 of 20Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Flyer Co. record the revenue?A.January B.February C.Some in January and some in February D.Flyer Co. should not record any revenueQuestion 18 of 20A buyer who acquires merchandise under credit terms of 1/10, n/30 has 10 days after the invoice date to take advantage of the cash discount.A. True B. FalseQuestion 19 of 20Liabilities that will not be due for more than one year are called long-term liabilities.A. True B. FalseQuestion 20 of 20The accrual basis of accounting recognizes: A.revenues when cash is received and expenses when cash is paid. B.revenues when earned and expenses when cash is paid. C.revenues when cash if received and expenses when incurred. D.revenues when earned and expenses when incurred.
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