18. Sales $400,000, Cost of Goods Sold $220,000; Operating Expenses- $ 40,000 Fi

Question

18. Sales $400,000, Cost of Goods Sold $220,000; Operating Expenses- $ 40,000 Find gross profit. a. $ 180,000 b. 150,000 c. 390,000 d. None of the above 19. Which of the following list gives the correct sequence of accounting procedures? a. Financial statements, trial balance, ledger, journal b Journal, ledger, trial balance, financial statements c. Ledger, trial balance, journal, financial statements d. Financial statements, journal ledgor trial balance 20. A $ 20,000 machine is purchased by paying $ 5,000 cash issuing a promissory note for the remainder. The journal entry would include a: a. Credit to Notes Receivable. b. Credit to Machinery c. Credit to Notes Payabie. d. Debit to cash 21. Which of the tollowing is not a valid adjusting entry a. Debit interest expense, credit interest payable b. Debit supplies expense, credit supplies Debit uneaned revenue, credit service revenue Debit insurance expense credit cash d. 22. Which of the following accounts is closed at periad end? a. Interest Expense b. Accumulated depreciation c Prepaid Insurance d Interest Receivable 23. Accumulated depreciation is what type of account? a. Asset b. Revenue c Expense d. None of the above 24. A vehicle that cost $ 90,000 was depreciated over 10 years. Using the straight-line met the annual depreciation expense a. $ 9,000 b. 4,500 C 3,500 d. None of above 3 Page

Explanation / Answer

Answer:-18)-Gross profit = $180000 (option a)

Explanation:- Sales - Cost of goods sold

                =$400000 - $220000

                = $180000

19)-The correct sequence of accounting procedure=

Journal, Ledger, Trial balance, Financial statements (option b).

20)- The journal entry would include a= Credit to notes payable (option c).

Explanation:-

Journal entry of purchasing of machinery:-

Accounts Titles and explanation                                  Debit                               Credit        

  

            Machinery A/c                                                 $20000

                    Notes payable                                                                                   $15000

                     Cash                                                                                                   $5000

            (Being machinery purchased)

21)-The following is not a valid adjusting entry:-

Debit insurance expense credit cash

Explanation:-

There are five types of adjusting entries:-

1)-Accrued Revenues

2)-Accrued Expenses

3)-Unearned Revenues

4)-Prepaid Expenses

5)-Depreciation

The above journal entry is not comes under the valid adjusting entry.

22)-The following accounts is closed at period end:- Interest expense (option a).

Explanation:-

At the end of a company's accounting year, the organisation should close all of the temporary accounts. Temporary accounts accumulate balances for a single fiscal year and are then emptied. Conversely, permanent accounts accumulate balances on an ongoing basis through many fiscal years.

The most common types of temporary accounts are for revenue, expenses, gains, and losses - essentially any account that appears in the income statement.

23)-Accumulated depreciation is a Asset account (option a).

Explanation:- The accumulated depreciation account is an asset account with a credit balance (also known as a contra asset account); it means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported.

24)- Using the straight line Method, the annual depreciation expenses:- $9000 (option a)

Explanation:-

Straight line Method = Cost of asset- Salvage value of asset/No. of useful life (years)

                                        =$90000/10 years= $9000

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