Question

The collection of a $2,000 account within the 2 percent discount period will result in a

	debit to Sales Discounts for $40.
	debit to Accounts Receivable for $1,960.
	credit to Accounts Receivable for $1,960.
	credit to Cash for $1,960.

The form of the income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

	multiple-step income statement.
	report-form income statement.
	single-step income statement.
	revenue income statement.

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

	valued at their current cost.
	not over-valued.
	valued at their selling price.
	not under-valued.

Of the following businesses, which one would not be likely to use the specific identification formula for inventory costing?

	Antique Shop
	Car Dealer
	Grocery Store
	Piano Store

Answer 1

Sales discount = $2,000 * 2% = $40

Cash received = $2,000 - $40 = $1,960

The answer is Debit sales discounts for $40

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The answer is Single step income statement.

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The answer is Not over-valued.

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The answer is Grocery store.