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Acc 201 Sample Test 1form 2 page 4

Acc 201 Sample Test 1form 2 page 4 - recognized on 14 The...

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9. Under accrual accounting, sales revenue is recorded when the: A. The earnings process is complete or nearly so. B. Collection of the cash for the goods is probable. C. Sales transaction is completed. D. All of the above. 10. 1/31/07, 450 accounting textbooks were sold to students at a sales price of $60 each. The accounting textbooks were previously purchased, on 1/10/07, for $50 each by the bookstore from a local publisher. What is the appropriate journal entry, on 1/31/07, to recognize the expense for the books sold? A. Cost of Goods Sold $22,500 Book Inventory $22,500 B. Cost of Goods Sold $27,000 Book Inventory $27,000 C. Book Inventory $27,000 Cost of Goods Sold $27,000 D. Book Inventory $22,500 Cost of Goods Sold $22,500 E. No journal entry is necessary for the expense on 1/31/07; the expense should have been
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Unformatted text preview: recognized on 1/10/07. 14. The Matly Carpet Cleaning Company had employees work for them during the last week of December. Payroll is always paid on Friday’s. Since December 31 fell on Tuesday, the company did not pay the employees and did not make an entry to record anything related to the employees for this last week. This oversight would cause A liabilities to be overstated. B. net income to be understated. C. net income to be overstated. D. cash to be overstated. E. expenses to be overstated. 15. When a company pays interest due on money it has borrowed, the payment of the interest is reported on the Statement of Cash Flows as what type of cash flow? A. Financing Activity B. Investing Activity C. Operating Activity D. Borrowing Activity 1...
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