Question

Circle the correct answer.

1. Unearned revenue is?

   1. A liability

   2. A deferral

   3. Both A and B

   4. An Accrual

2. Outstanding checks are reconciled by;

   1. Deducting the check from the balance per the bank.

   2. Adding the check to the balance per the bank.

   3. Deducting the check from the balance per the books.

   4. Adding the check to the balance per the books.

3. Deposits in transit are reconciled by;

   1. Deducting the check from the balance per the bank.

   2. Adding the check to the balance per the bank.

   3. Deducting the check from the balance per the books.

   4. Adding the check to the balance per the books.

4. The method for accounting which involves estimating bad debts at the end of the period?

   1. Net Realizeable Value Method

   2. Direct Write-Off Method

   3. Periodic Method

   4. Allowance Method

5. Allowance for doubtful accounts is what type of account?

   1. Asset

   2. Liability

   3. Contra Asset

   4. Contra Revenue

6. Method of estimating bad debts based on preparing a schedule of aged customer accounts balances.

   1. Percentage of Sales

   2. Percentage of Receivables

   3. Direct Write-Off

   4. Credit Based

7. Which of the following is included in the cost of inventory?

   1. Purchase Price

   2. Freight In

   3. Installation/Set Up Charges

   4. All of the above

8. Which type of inventory system involves updating the inventory account only at the end of the accounting period?

   1. Periodic Inventory System

   2. Perpetual Inventory System

   3. Direct Inventory System

   4. Indirect Inventory System

9. Companies could choose between the different inventory systems based on which of the following?

   1. Compatibility with similar companies

   2. Maximizing net income

   3. Maximizing cash flow

   4. All of the above.

10. The lower of cost or market rule describes the market value as?

    1. The cost of inventory accounted for inflation.

    2. The replacement cost of inventory.

    3. The impaired value of the asset.

    4. The value of inventory at its purchase price.

Answer 1

Sr No	Correct Answer	Reason
1	A liability	As Receipient debit the cash and credit this acccount
2	Deducting the checks from balance as per bank
3	Adding the check to balance as per Bank
4	Allowance Method	allowance method used to estimate the bad debts
5	Liability	As it has always Credit Balance and provision in nature
6	Percentage of Sales methos
7	All of the Above	All are direct expenses
8	Periodic Inventory System	in this system at the end of period inventory updated
9	All of the above	all can be basis foe choosing the system
10	The replacement cost of inventory