Question

14. In preparing closing entries b. each expense account will be credited. e. the dividends account will be debited if there is net income for the period d. the dividends account will be debited. 15. In a period of rising prices, FIFO will have a. lower net income than LIFO. b. lower cost of goods sold than LIFO c. lower income tax expense than LIFO. d. lower net purchases than LIFO Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be a. $35,400 b. $29,400. c. $24,600 16. d. $24,000. 17. Unearned revenue is classified as a. an asset account. b. a revenue account. c. a contra-revenue account. d. a liability 18. The primary purpose of the statement of cash flows is to provide information about the investing and financing activities during a period. prove that revenues exceed expenses if there is a net income. provide information about the cash receipts and cash payments during a period. facilitate banking relationships. a. b. c. d. At May 1, 2018, Kibbee Company had beginning inventory consisting of 100 units with a unit cost of S7. During May, the company purchased inventory as follows: 19. 400 units at $7 300 units at $8 The company sold 500 units during the month for $12 per unit. Kibbee uses the average cost method. The value of Kibbee's inventory at May 31, 2018 is a. $1,500.00 b. $2,212.50. c. $2,250.00. d. $3,750.00. A buyer would record a payment within the discount period under a perpetual inventory system by crediting a. Accounts Payable. b. Inventory c.' Purchase Discounts. d. Sales Discounts. 20.

Answer 1

Solution 14:

In preparing closing entries, "Each expense account will be credited"

Hence option b is correct.

Solution 15:

In period of rising prices FIFO will have "lower cost of goods sold than LIFO"

Hence option b is correct.

Solution 16:

Depreciation expense each year using SLM = (Cost - Salvage value) / Useful life

= [($150,000 + $7,000 + $20,000) - $30,000] / 5 = $29,400

Hence option b is correct.

Solution 17:

Unearned revenue is classified as " a liability"

Hence option d is correct.

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