Question

22.

Which of the following accounts would be found in an accrual adjusting entry?

		a. Prepaid Insurance
		b. Unearned Revenue
		c. Supplies
		d. Wages Payable

23.

Donovan Co. uses the aging method to allow for uncollectible accounts. Donovan's accountants have estimated that $37,000 of current accounts receivable will eventually become uncollectible. The current balance of the Allowance for Uncollectible Accounts is an $4,000 credit. For what amount should the Allowance account be adjusted this period?

		a. $41,000
		b. $37,000
		c. $34,000
		d. $33,000

24.

The cost of replacing a dead battery in a car would probably be considered an:

		a. extraordinary repair
		b. addition
		c. betterment
		d. ordinary repair

25.

Assuming that inventory costs have been rising throughout the period, use of the LIFO inventory method will produce a lower value for Net Income than will the FIFO or Average inventory methods.

		a. True
		b. False

Answer 1

22. In case of accrual adjustment entry, "Wages payable" is used for recognising the liability related to wage expenses.

hence answer is option no. (d)

23. As per latest values of account receivable , $37000 would be uncollectible and $4000 is already there in the account "allowance for Current receivable" , so $33000($37000-$4000) would be added to account "allowance for Current receivable"

hence answer is option no. (d)

24. As the replacement of battery would increase the performance of car, hence it would be considered as "extraordinary repair"

hence answer is option no.(a)

25. Use of LIFO method during increasing prices would increase the "Cost of goods sold" in Income statement and hence the net income gets reduced.

hence answer is option no. (1)