Question

1. what happens when a company accrues salaries at the end of the accounting period. A. Its debt to equity ratio decreases. B. Its current ration increases. C. Its acid-test ratio increases. D. Its debt to equity ratio increases.

2. a sale on account would include which of the following. A. A crediting to an asset account. B. A debiting to a revenue account. C.A crediting to a liability account. D. A debit to an asset account.  

3. which of the following is a permanent account. A. Gain on sale of equipment. B. Cost of goods sold. C. Depreciation expense. D. Accumulated depreciation.

Answer 1

1 D. Its debt to equity ratio Increases. Notes: accures salaries means salaries payable account increses in Current liabilities head. It means Current ratio Decreases and Debt to equity ratio Increses and acid test ratio decreases Current ratio = Current assets/Current liabilities Acid Test ratio = quick assets/Quick liabilities Debt to equity ratio = Total liabilities/Total stockholders equity 2 D. A Debit to an asset account. Notes: Sales on account journal entry : Debit accounts Receivables and credit sales Account receivables is a current asset 3 D. Accumulated Depreciation Notes: All income and expenditure accounts treated as temparaory accounts All balance sheet accounts treated as permanent account Gain on sale of equipment - Income and Expenditure account - Temparary account Cost of Goods Sold - Income and Expenditure account - Temparary account Depreciation expense - Income and Expenditure account - Temparary account Accumulated depreciation - Balance Sheet - permanent account