When the accrual basis of accounting is used, expenses are recognized only in the period during which they are paid.

• True

• False

The balance of the Merchandise Inventory account that appears in the Trial Balance section of the worksheet represents the stock of goods on hand at the beginning of the current period.

• True

• False

On July 1, 20X1, a firm purchased equipment for $9,300. Depreciation expense for the year ended December 31, 20X1, given the straight-line method, a 6-year useful life, and a salvage value of $300, is:

• $750.

• $775.

• $1,500.

• $1,550.

On May 1, 20X1, a firm paid $3,000 in advance for one year of office rent. The rent expense incurred during the year as of December 31, 20X1 is:

• $250.

• $1,000

• $2,000.

• $3,000.

Under a periodic inventory system, the Merchandise Inventory account is debited when goods are purchased for resale and credited when goods are sold and delivered to customers.

• True

• False

Under a periodic inventory system, Merchandise inventory is adjusted in two steps because both the beginning and ending inventory figures are needed to prepare the income statement.

• True

• False

Allowance for Doubtful Accounts is:

• deducted from Sales in the Revenue section of the income statement.

• listed in the Liabilities section of the balance sheet.

• subtracted from Accounts Receivable in the Assets section of the balance sheet.

• listed in the Liabilities section of the balance sheet.

Under a periodic inventory system, to remove the beginning inventory from the books, the Income Summary account is credited for the amount of the beginning inventory.

• True

• False

The account "allowance for doubtful accounts" is a contra-revenue account.

• True

• False

The journal entry to record interest that has been earned but not yet received includes a debit to Interest Receivable and a credit to Interest Income.

• True

• False