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1AIS 100 PRACTICE EXAM 1 I. Multiple Choice (50 points) 1. Adjustments for unearned revenue:a)Decrease liabilities and increase assets b)Decrease revenues and increase assets c)Decrease liabilities and increase revenues d)Decrease expenses and increase liabilities 2. Nevens Knickknacks purchased goods for inventory and paid the transportation costs. The journal entry for the freight costs will include a credit to cash and a debit toa)Merchandise inventory b)Freight-out c)Delivery expense d)Cost of goods sold 3. Financial information for Derr Drivers is presented below: Operating Expenses $ 45,000 Sales Returns and Allowances 13,000 Sales Discount 6,000 Sales 160,000 Cost of Goods Sold 77,000 What is the gross profit rate for Derr? 4. With respect to the income statement, 5. The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is its 6. Employees at Heyerdahl Houseplants are paid $5,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense would be need to be recorded two days later on January 2?a)$5,000 b)$2,000 c)$3,000 d)$0 7. Dividends appear on
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