ACC Multiple choice

A credit granted to a customer for returned goods requires a debit to: A. sales returns and allowances and a credit to accounts receivable. B. accounts receivable and a credit to a contra-revenue account. C. cash and a credit to sales returns and allowances. D. sales revenue and a credit to cash.

A

Balance sheet accounts are considered to be: A. permanent accounts. B. nominal accounts. C. equity accounts. D. temporary stockholders' equity accounts.

A

If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a: A. credit to the retained earnings account. B. debit to the dividends account. C. debit to the retained earnings account. D. credit to the dividends account.

A

The balance in the income summary account before it is closed will be equal to: A. the net income or loss on the income statement. B. zero. C. the ending balance in the retained earnings account. D. the beginning balance in the retained earnings account.

A

Sales returns and allowances are classified as a: A.expense account. B.contra revenue account. C. asset account. D. contra asset account.

B

A post-closing trial balance will show: A. only income statement accounts. B. zero balances for all accounts. C. zero balances for balance sheet accounts. D. only balance sheet accounts.

D

In order to close the dividends account, the A. income summary account should be debited. B. income summary account should be credited. C. retained earnings account should be credited. D. retained earnings account should be debited.

D

Two categories of expenses for merchandising companies are A. cost of goods sold and financing expenses. B. sales and cost of goods sold. C. operating expenses and financing expenses. D. cost of goods sold and operating expenses.

D

Proper steps in accounting cycle

Prepare a trial balance, prepare adjusting entries, prepare financial statements.

Gross Profit

net sales - cost of goods sold