When we collect Sales tax we DR Cash and Credit A Liability B) An Expense &

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When we collect Sales tax we DR Cash and Credit A Liability B) An Expense &

When we collect Sales tax we DR Cash and Credit
1. A Liability B) An Expense C) Revenue D) An Asset

How many of the following events would require an expense to be recorded? Ordering office supplies

Hiring a receptionist

Paying employees' salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance

One. B) Four. C) Three. D) Two.

The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's profit margin?

A) 15%. B) 12%. C) 16%. D) 14.12%.

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio?
1. No change to the current ratio and decrease the acid-test ratio.
2. Decrease the current ratio and decrease the acid-test ratio.
3. Increase the current ratio and increase the acid-test ratio.
4. Decrease the current ratio and increase the acid-test ratio.

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2, which one of the following is true?
1. Net income is overstated in year 2. B) Retained earnings is overstated in year 1.

C) Cost of goods sold is overstated in year 1. D) Net income is understated in year 1.

business accounting

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Answer 1

Answer #1

73. Correct Option is - A Liability (Sales Tax Payable)

74. Correct option is D) Two.

Explanation

Ordering office supplies - No expense required to be booked

Hiring a receptionist - No expense required to be booked

Paying employees' salaries for the current month - Expense should be booked

Receiving but not paying a current utility bill Expense should be booked

Paying for insurance in advance -No expense will be booked. Only an asset (Prepaid Insurance) will be created.

75. Correct answer is Option B) 12%.

Explanation

Profit Margin =Net Income/Net Sales = 240000/2000000 = 12%

76.The correct option is - A) No change to the current ratio and decrease the acid-test ratio.

Explanation

Current Ratio = Current Assets/Current Liablities

Quick Ratio = Quick Assets/Current Liabilities = (Cash+Marketable Securities+Accounts Receivables)/Current Liabilities

77. The correct option is B) Retained earnings is overstated in year 1.

Explanation
If ending balance of inventory is overstated, Cost of Goods will be lower resulting in higher net income and retained earnings.

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Answer 2

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