Accounting Concepts Quiz

MKF Industries initially records supplies as an expense; therefore, it should record a reversing entry for supplies.

• True

• False

• Sometimes true

• Not enough information

If the term of a note is 180 days and the note is dated April 15, it is due September 15.

• True

• False

• Only if it's a leap year

• Only if it's a non-leap year

The closing entry for Supplies Expense would be a debit to Supplies Expense and a credit to Income Summary.

• True

• False

• Only in certain cases

• Not applicable

Supplies may be recorded initially as an expense or as an asset.

• True

• False

• Only as an expense

• Only as an asset

On December 31, Peter, Inc., owes 15 days of accrued interest on a $6,000.00 note payable at 8% interest. The adjusting entry includes a debit to Interest Expense for $20.40.

• True

• False

• Only if interest is compounded

• Only if interest is simple

The payment of a warranty claim results in a debit to a liability account.

• True

• False

• Only if the claim is valid

• Only if the claim is invalid

The accrual of warranty expenses is an application of the Matching Expenses with Revenue concept.

• True

• False

• Only in certain industries

• Not applicable

If the principal of a 90-day note is $10,000.00 and the interest due at maturity is $246.58, the interest rate on the note is 10%.

• True

• False

• Only if compounded annually

• Only if compounded monthly

If Bestone Co. initially records supplies as an expense, the amount in the expense account before adjustment equals the beginning balance in the Supplies Expense account plus all supplies bought during the current fiscal period.

• True

• False

• Only if supplies are used

• Only if supplies are unused

The difference in the accounting for warranties and uncollectible accounts receivable is that only Allowance for Uncollectible Accounts has a related asset account.

• True

• False

• Both have related asset accounts

• Neither have related asset accounts