PA review ss6

Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

• Business entity assumption.

• Measurement (Cost. Principle).

• Going-concern assumption.

• Expense recognition (Matching. principle.).

A double-entry accounting system is an accounting system:

• That records the effect of each transaction in at least two accounts with equal debits and credits.

• That allows total credits to be greater than total debits.

• That records each transaction twice.

• In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.

Accumulated Depreciation is

• An expense account.

• A contra asset account.

• An owner’s equity account.

• A liability account.

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

• Land.

• Unearned Revenue.

• S. Stills, Withdrawal.

• Accounts Payable.

When closing entries are made:

• All ledger accounts are closed to start the new accounting period.

• All asset accounts are closed but liability accounts are not closed.

• All temporary accounts are closed but permanent accounts are not closed.

• All permanent accounts are closed but temporary accounts are not closed.

Which of the following expressions is incorrect?

•  Gross profit – operating expenses = net income

• Operating expenses – cost of goods sold = gross profit

• Net income + operating expenses = gross profit

• Sales revenue – cost of goods sold – operating expenses = net income

Detailed records of goods held for resale are not maintained under a

• Periodic inventory system.

• Perpetual inventory system.

• Double entry accounting system.

• Single entry accounting system.

When inventory costs are declining, which of the following inventory costing method will result in the lowest ending merchandise inventory?

• weighted-average

• last-in, first-out

• specific identification

• first-in, first-out

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:

• FIFO

• Specific identification.

• LIFO

• Weighted average.