Exam 14: Adjustments and the Work Sheet for a Merchandising Business

If beginning inventory is $12,000 and ending inventory is $9,000, the first step in the adjusting process is to credit Merchandise Inventory for $9,000.

Under the accrual basis of accounting, revenue is recorded when earned regardless of when cash is received.

Under the perpetual inventory method, when inventory is purchased, Merchandise Inventory

Both the debit and credit amounts from which of the following accounts are extended to the Adjusted Trial Balance columns of the work sheet?

If the ending inventory is overstated for any reason, net income will also be overstated.

Merchandise Inventory has a normal debit balance.

Match the terms with the definitions. -Accounts that are deducted from the Purchases account when computing cost of goods sold (i.e., Purchases Returns and Allowances, Purchases Discounts).

Which of the following accounts is never debited or credited during the accounting period?

The credit amount for Income Summary in the Adjusted Trial Balance column reflects the inventory on hand at the end of the accounting period.

During the accounting period, the Unearned Revenue account had a balance of $50,000 for computer equipment and software yet to be delivered. On March 31, a delivery of all of the equipment was made, leaving $5,000 worth of software pending. The correct journal entry to record this activity on March 31 is to

In journalizing adjusting entries, Merchandise Inventory is credited for the amount of ending inventory.

An increase in a revenue account may reflect an increase in an asset account.

Unearned Revenue is a liability account.

When part of the amount of unearned revenue has been earned, the unearned revenue account must be adjusted.

A typical account found under the heading of "Revenue" in a chart of accounts is

Both the debit and credit amounts in the merchandise inventory account at the end of an accounting period are used to calculate the cost of goods sold.

If the ending inventory is overstated for any reason,

Some businesses require payment before delivering a product or performing a service.

Which of the following accounts would NOT be found under the heading of "Cost of Goods Sold" in a chart of accounts?

Match the terms with the definitions. -A physical count of goods on hand.