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Accounting Principles and Financial Statements

Overview of fundamental accounting principles and financial statements.

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    Accounting Principles and Financial Statements ACCOUNTING MCQ 1. The Sales Returns and Allowances A) 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 the income 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, its net sales were A) $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 sales tax 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 sale A) 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, Al lowance for Doubtful Accounts has a credit balance of $200. An age 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) $800. B) $1,000. C) $1,200 D) $200 6. When the allowance method of recognizing losses from uncollectible accounts is used, the entry to record the write - off ofa specific account consists of A) a debit to Uncollectible Accounts Ex pense 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 Accounts Receivable account at year - end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $3 00. 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

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