Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner?

Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner?

Prepaid Rent and Advertising Expense

Common Stock and Unearned Rent Revenue

Salaries and Wages Expense and Notes Payable

Service Revenue and Notes Payable

Under the accrual basis of accounting:

cash must be received before revenue is recognized.

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

net income is calculated by matching cash outflows against cash inflows.

the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies:

remaining.

purchased.

used.

either used or remaining.

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using?

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using?

LIFO

Average cost method

No inventory costing method directly affects the current ratio

FIFO

The LIFO inventory method assumes that the cost of the latest units purchased are

the last to be allocated to cost of goods sold.

the first to be allocated to ending inventory.

the first to be allocated to cost of goods sold.

not allocated to cost of goods sold or ending inventory.

A dishonored note receivable

Is no longer negotiable.

Must be written off by the lender.

Creates a claim against the maker for the amount of principal only.

Is one that is not paid in full within 10 days of maturity.

A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company.

True

False

Indicate the nature of each account.Indicate the normal balance by inserting Debit or Credit.

Indicate the nature of each account. Type Of Account 1. Supplies  None of the aboveExpenseAssetLiabilityRevenues 2. Note Payable  AssetLiabilityRevenuesExpenseNone of the above 3. Service Revenue  RevenuesNone of the aboveAssetLiabilityExpense 4. Dividends  AssetLiabilityExpenseRevenuesNone of the above 5. Accounts Payable  LiabilityRevenuesAssetExpenseNone of the above 6. Salaries and Wages Expense  LiabilityExpenseRevenuesNone of the aboveAsset 7. Common Stock  None of the aboveExpenseAssetLiabilityRevenues 8. Accounts Receivable  ExpenseLiabilityNone of the aboveAssetRevenues 9. Equipment  RevenuesAssetLiabilityExpenseNone of the above 10. Notes Receivable  LiabilityNone of the aboveExpenseRevenuesAsset SHOW ANSWER LINK TO TEXT Attempts: 1 of 1 used

(b) Your answer is correct.     Indicate the normal balance by inserting Debit or Credit. Normal Balance 1. Supplies  CreditDebit 2. Note Payable  DebitCredit 3. Service Revenue  DebitCredit 4. Dividends  DebitCredit 5. Accounts Payable  CreditDebit 6. Salaries and Wages Expense  CreditDebit 7. Common Stock  DebitCredit 8. Accounts Receivable  CreditDebit 9. Equipment  DebitCredit 10. Notes Receivable  CreditDebit