1. A purchase order is used to: A) requisition goods. B) sale goods. C) order goods. D) pay bills.

1.  A purchase order is used to:

A) requisition goods.

B) sale goods.

C) order goods.

D) pay bills.

2. The account used to record the purchase of goods is:

A) Purchase Returns and Allowances.

B) Purchase Discounts.

C) Accounts Payable.

D) Purchases.

3.  The entry to record a payment on a $900 account within the 1% discount period would include a:

A) credit to Purchases for $909.

B) debit to Cash for $891.

C) debit to Accounts Payable for $891.

D) debit to Accounts Payable for $900.

4.  A purchase discount was recorded as a credit to the Purchases account - the remainder was correctly recorded. This error will cause:

A) net income will be understated.

B) net income will be overstated.

C) total assets will be overstated.

D) None of these are correct.

5.  The freight paid on equipment purchased F.O.B. shipping point was debited to the Freight-In account. This error will cause:

A) net income will be understated.

B) net income will be overstated.

C) total assets will be overstated.

D) None of these are correct.

6.  A purchase discount that was earned and taken was never recorded. This error will cause:

A) total assets will be overstated.

B) net income will be understated.

C) net income will be overstated.

D) None of these are correct.

7.  Returned merchandise paid for within the discount period for a cash refund. This will be recorded with:

A) a credit to an asset.

B) a debit to a liability.

C) a credit to a liability.

D) a debit to an asset.

8.  The inventory method that matches old costs with current selling prices is:

A) specifi c invoice.

B) FIFO.

C) weighted-average.

D) LIFO.

9.  If the ending inventory is overstated,

A) gross profit is overstated.

B) cost of goods sold is overstated.

C) gross profit is understated.

D) None of these answers are correct.

10.  A business is using LIFO when FIFO should have been used during an inflationary period. This error would cause:

A) the period’s net income to be overstated.

B) the period end assets to be understated.

C) the period end assets to be overstated.

D) None of these are correct.

11.  When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:

A) the period’s net income will be understated.

B) the period end assets will be understated.

C) the period’s net income will be overstated.

D) None of these are correct.