Question

journalize the transaction for TED co. assuming the company uses direct white off method to deal

L. Multliple Choice Questions. ONLY ONE answer is correct. (2' X 10 -20) 1. Which of the following does not describe accounting? a. Language of business. b. Is an end rather a means to an end. c. Useful for decision making. d. Used by business, government, nonprofit organizations and individuals 2. Waterworld Shop purchased a truck for $12,000, making a down payment of $5,000 cash and signing a $7,000 note payable due in 60 days. As a result of this transaction a. Total assets increased by $12,000. b. Total liabilities increased by $7,000 c. From the point of view of a short-term creditor, this transaction makes the business more liquid. d. This transaction had an immediate effect on the owner's equity in the business. 3. The following statements correctly describe net income except a. Net income is equal to revenue minus the sum of expenses and dividends. b. Net income is equal to revenue minus expenses. c. Net income increases owner's equity d. Net income is reported by a company for a specific period of time. 4is a type of account credited when customers pay in advance for services to be rendered in the future. a. Prepaid expenses c. Unearned revenue b. Accrued expenses d. Unrecorded revenue 5is the method used to record the cost of goods sold when each unit in the inventory is unique. a. Specific identification b. FIFO method c. LIFO method 6. Which of the followine account d. Average method

Answer 1

Answer(1): Option "b" is correct that says, "is an end rather a means to an end".

This statement is not related to accounting, other statements are related to accounting in some or the other way.

Answer(2): Option "b" Total liabilities increased by $7000.

Purchase of truck increases assets by $12000 but on the other hand, cash decreases the assets by $5000, Notes payable is liability and it increases the liabilities by $7000.

Answer(3): Option "a" is correct.

Net Income is equal to revenue minus sum of expenditures, Dividend is given out of the net income so once the net income is calculated, dividend is deducted from the net income and not from the revenue. Dividend is given based on Net Income.

Answer(4): Option "c" is correct.

Unearned revenue occurs when customer has made the payment in advance and company has received it before the fulfilment of service. It is a liability.

Answer(5): Option "a" is correct.

Specific identification method is the inventory method that is used to record the COGS when each unit of inventory is unique.