Accounting - Preparing An 8-Column Work Sheet For A Merchandising Business - Part 1 Question Preview (ID: 1898)

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A business prepares a summary of financial information at least once each fiscal period because financial information
a) is needed to make management decisions.
b) shows whether a profit is being made or a loss is being incurred.
c) is needed to prepare tax reports.
d) all of these.

The entry to journalize the adjustment for merchandise inventory when beginning Merchandise Inventory is $125,000.00 and ending Merchandise Inventory is $110,000 is
a) debit Merchandise Inventory, $15,000.00; credit Income Summary, $15,000.00.
b) debit Income Summary, $15,000.00; credit Merchandise Inventory, $15,000.00.
c) debit Merchandise Inventory, $110,000.00; credit Income Summary, $110,000.00.
d) debit Income Summary, $110,000.00; credit Merchandise Inventory, $110,000.00.

The general ledger account in which goods on hand for sale to customers are recorded is titled
a) Merchandise Inventory.
b) Inventory.
c) Purchases.
d) Purchases Inventory.

The adjustment for federal income tax includes
a) an expense and a liability account.
b) an expense account only.
c) an expense account and a temporary equity account.
d) a liability account only.

The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called
a) book value.
b) accumulated depreciation.
c) salvage value.
d) net realizable value.

Recording expenses in the fiscal period in which the expenses contribute to earning revenue is an application of the accounting concept
a) Accounting Period Cycle.
b) Adequate Disclosure.
c) Matching Expenses with Revenue.
d) Historical Cost.

Depreciation expense is calculated using all of the following except
a) fair market value.
b) estimated salvage value.
c) estimated useful life.
d) original cost.

The book value of accounts receivable
a) is equal to the balance in the Accounts Receivable controlling account.
b) reflects the amount the business expects to collect in the future.
c) is calculated as Accounts Receivable less Uncollectible Accounts Expense.
d) can be obtained from a single general ledger account.

When a work sheet is completed, a net loss will appear in the
a) Income Statement Debit and Balance Sheet Credit columns.
b) Income Statement Credit and Balance Sheet Debit columns.
c) Income Statement Debit and Income Statement Credit columns.
d) Balance Sheet Debit and Balance Sheet Credit columns.

A work sheet is
a) used to plan adjustments and sort financial statement information.
b) prepared only once a year.
c) prepared to aid in the analysis of financial statements.
d) not necessary for a small business.

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