Question

1.       Barnes Company showed the following balances at the end of its first year:

Cash     $10,000

Prepaid insurance         800

Accounts receivable      4,500

Accounts payable          2,800

Notes payable               4,200

Unearned revenues       5,400

Revenues                       21,000

Expenses                       17,500

What did Barnes Company show as total debits on its trial balance?

a.         $15,300

b.           $20,700

c.          $32,800

d.         None of the above

2.       The right side of an account is

a.         blank.

b.         a description of the account.

c.          the credit side.

d.         the balance of the account.

3. Gross profit equals the difference between

a.         net income and operating expenses.

b.          sales revenues and cost of goods sold.

c.          sales revenues and operating expenses.

d.          sales revenues and cost of goods sold plus operating expenses.

4. Under a perpetual inventory system

a.         accounting records continuously disclose the amount of inventory.

b.         increases in inventory resulting from purchases are debited to purchases.

c.          there is no need for a year-end physical count.

d.         the account purchase returns and allowances is credited when goods are returned to vendors.

5. The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

a.         Accounts Payable.

b.         Purchase Returns and Allowances.

c.          Sales Revenue.

d.         Merchandise Inventory.

Answer 1

Answer- 1)-Barnes Company show as total debits on its trial balance =$32800 (Option c).

Explanation- Total debits of trial balance = Cash+ Prepaid insurance+ Accounts receivable+ Expenses

= $10000+$800+$4500+$17500

= $32800

2)- The right side of an account is = the credit side (Option c).

3)- Gross profit equals the difference between = Sales revenues and cost of goods sold (Option b).

Explanation- Gross profit = Sales revenues – Cost of goods sold

4)- Under a perpetual inventory system = accounting records continuously disclose the amount of inventory (Option a).

5)- The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit= Merchandise Inventory (Option d).