Q. What is the journal entry for recording a sale of goods for cash?
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A.
Debit Cash, Credit Sales Revenue
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B.
Debit Sales Revenue, Credit Cash
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C.
Debit Accounts Receivable, Credit Cash
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D.
Debit Cash, Credit Inventory
Solution
When goods are sold for cash, the cash account is debited to increase it, and sales revenue is credited to recognize the income.
Correct Answer:
A
— Debit Cash, Credit Sales Revenue
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Q. Which accounting principle requires expenses to be matched with revenues?
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A.
Revenue Recognition Principle
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B.
Matching Principle
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C.
Cost Principle
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D.
Conservatism Principle
Solution
The Matching Principle requires that expenses be matched with the revenues they help to generate in the same accounting period.
Correct Answer:
B
— Matching Principle
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Q. Which inventory valuation method is most commonly used in practice?
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A.
FIFO
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B.
LIFO
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C.
Weighted Average
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D.
Specific Identification
Solution
FIFO (First In, First Out) is commonly used as it reflects the actual flow of goods in many businesses, especially perishable items.
Correct Answer:
A
— FIFO
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Q. Which of the following is a characteristic of the straight-line method of depreciation?
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A.
Higher expense in early years
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B.
Equal expense each year
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C.
Variable expense based on usage
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D.
Accelerated expense in later years
Solution
The straight-line method of depreciation allocates an equal amount of expense each year over the useful life of the asset.
Correct Answer:
B
— Equal expense each year
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