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ARMSTRONG 11a practicemidterm 1.pdf
ARMSTRONG_11a_practicemidterm_1.pdf
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33.
The credit terms 2/10, n/30 are interpreted as:
A)
2% cash discount if the amount is paid within 10 days, with the balance due in 30
days.
B)
10% cash discount if the amount is paid within 2 days, with balance due in 30 days.
C)
30% discount if paid within 2 days.
D)
30% discount if paid within 10 days.
E)
2% discount if paid within 30 days.
34.
An asset created by prepayment of an expense is:
A)
Recorded as a debit to an unearned revenue account.
B)
Recorded as a debit to a prepaid expense account.
C)
Recorded as a credit to an unearned revenue account.
D)
Recorded as a credit to a prepaid expense account.
E)
Not recorded in the accounting records until the earnings process is complete.
35.
Which of the following statements is incorrect?
A)
Prepaid expenses, depreciation, and unearned revenues involve previously recorded
assets and liabilities.
B)
Accrued expenses and accrued revenues involve assets and liabilities that had not
previously been recorded.
C)
Adjusting entries can be used to record both accrued expenses and accrued
revenues.
D)
Prepaid expenses, depreciation, and unearned revenues often require adjusting
entries to record the effects of the passage of time.
E)
Adjusting entries affect the cash account.
36.
The Retained Earnings account has a credit balance of $17,000 before closing entries
are made. If total revenues for the period are $55,200, total expenses are $39,800, and
dividends are $9,000, what is the ending balance in the Retained Earnings account after
all closing entries are made?
A)
$
8,000.
B)
$15,400.
C)
$23,400.
D)
$17,000.
E)
$32,400.
Page
9
Page 11
37.
A company uses the perpetual inventory system and recorded the following entry:
Accounts Payable
................................ ............
2,50
0
Merchandise Inventory
..........................
50
Cash
2,45
0
This entry reflects a:
A)
Purchase.
B)
Return.
C)
Sale.
D)
Payment of the account payable and recognition of a cash discount taken.
E)
Purchase and recognition of a cash discount taken.
38.
A company's net sales were $676,600, its cost of good sold was $236,810 and its net
income was $33,750.
Its gross margin ratio equals:
A)
5%.
B)
9.6%.
C)
35%.
D)
65%.
E)
285.7%.
39.
Rules adopted by the accounting profession as guides in measuring, recording, and
reporting the financial condition and activities of a business:
A)
Are comprised of both general and specific principles.
B)
Are known as generally accepted accounting principles.
C)
Are abbreviated as GAAP.
D)
Arise from both long-used practices and from rulings of authoritative groups.
E)
All of the above.
40.
A debit is used to record:
A)
A decrease in an asset account.
B)
A decrease in an expense account.
C)
An increase in a revenue account.
D)
An
increase in the balance of common stock.
E)
An increase in the balance of retained earnings.
Page 10
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