ACCOUNTING QUESTION

1) In a firm that uses special journals, a sale of merchandise on credit is recorded in the __________ journal.


A. cash payments


B. cash receipts


C. sales


D. purchases


2) A firm that sells goods that it purchases for re-sale is a __________ business.


A. service


B. merchandising


C. manufacturing


D. non-profit




3) Merchandise is sold on credit for $600 plus 5 percent sales tax. The entry in the sales journal will include a debit to Accounts Receivable for:


A. $600.00.


B. $603.50.


C. $605.50.


D. $630.00.



4) To find the balance due from an individual customer, the accountant would refer to the:


A. sales journal.


B. Sales account in the general ledger.


C. accounts receivable subsidiary ledger.


D. Accounts Receivable account in the general ledger.



5) The Sales Returns and Allowances account is classified as a(n) __________ account.


A. asset


B. contra asset


C. revenue


D. contra revenue



6) If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were:


A. $54,000.


B. $50,000.


C. $46,000.


D. $4,000. 



7) After all postings have been made, the total of the schedule of accounts receivable should equal the:


A. balance of the Sales account.


B. total of the Accounts Receivable Debit column in the sales journal.


C. balance of the Accounts Receivable account in the general ledger.


D. total of all sales on account for the accounting period.



8) A wholesale business sells goods with a list price of $900 and a trade discount of 40 percent. The increase to the sales account should be recorded at:


A. $360.00.


B. $540.00.


C. $900.00.


D. $940.00.



9) A retailer recorded the following in June: cash sales $2,000; credit sales, $9,000; sales returns and allowances, $1,000. Assuming the sales tax rate is 7 percent, the entry to record the sales tax payment includes a debit to Sales Tax Payable for:


A. $560.


B. $630.


C. $700.


D. $770.



10) Most credit sales, except for those involving customer use of bank credit cards such as MasterCard and VISA, are recorded as a debit to __________ and a credit to __________.


A. Cash; Sales


B. Accounts Receivable; Sales


C. Accounts Receivable; Cash


D. Sales; Accounts Receivable




11) The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to __________ and a credit to __________.


A. Uncollectible Accounts Expense; Accounts Receivable


B. Uncollectible Accounts Expense; Allowance for Doubtful Accounts


C. Allowance for Doubtful Accounts; Accounts Receivable


D. Accounts Receivable; Allowance for Doubtful Accounts



12) The method of accounting for losses from uncollectible accounts that focuses on an appropriate valuation of the accounts receivable on the balance sheet is:


A. the allowance method based on aging the accounts receivable.


B. the allowance method based on a percentage of net credit sales.


C. the direct charge-off method.


D. either the allowance method or the direct charge-off method.



13) The method that must be used to record bad debt losses for tax purposes is the:


A. allowance method based on a percent of net credit sales.


B. allowance method based on an aging of accounts receivable.


C. allowance method based on a percent of total accounts receivable outstanding.


D. direct charge-off method.



14) A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for:


A. $1,200.


B. $1,500.


C. $1,800.


D. $3,000.



15) On December 31, prior to adjustment, Allowance for Doubtful Accounts has a debit balance of $200. An aging analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for:


A. $200.


B. $800.


C. $1,000.


D. $1,200.




16) On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $400. An aging analysis of the accounts receivable produces an estimate of $2,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for:


A. $400.


B. $1,600.


C. $2,000.


D. $2,400.