Accounting Principles and Financial Statements

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Accounting Principles and Financial StatementsACCOUNTING MCQ1. The Sales Returns and AllowancesA) account is presented on the balance sheet as a deduction from Accounts Receivable.B) on the income statement as a deduction from Sales.C) on theincome statement as an addition to Sales.D) on the balance sheet as a deduction from Capital.2. If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, itsnet sales wereA) $54,000.B) $50,000.C) $46,000.D) $4,000.3. The entry to record a return by a credit customer of defective merchandise on which no salestax was charged includes:A) a debit to Return Expense and a credit to Accounts Receivable.B) a debit to Sales and a credit to Sales Returns and Allowances.C)a debit to Sales Returns and Allowances and a credit to Accounts Receivable.D) a debit to Accounts Receivable and a credit to Sales Returns and Allowances.4. With the accrual basis of accounting, it is appropriate to recognize revenue from a credit saleA) on the date of the sale.B) on the date the account is collected in full.C) each time a payment on an account balance is received.D) either on the date of the sale or when the amount of the sale is collected.5. On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balanceof $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probablelosses from uncollectible accounts. The adjusting entry needed to record the estimated lossesfrom uncollectible accounts is made forA) $800.B) $1,000.C) $1,200D) $2006. When the allowance method of recognizing losses from uncollectible accounts is used, theentry to record the write-off ofa specific account consists ofA) a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.B) a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.C) a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.D) a debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.7. A firm reported sales of $300,000 during the year and has a balance of $20,000 in its AccountsReceivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has acredit balance of $300. The firm estimated its losses from uncollectible accounts to be one-halfof 1 percent of sales. The entry to record the estimated losses from uncollectible accounts willinclude a credit to Allowance for Doubtful Accounts forA) $1,200

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