1. On January 1, machine with useful life of 5 years and residual value of $2,000 was bought for $10,000. Compute the depreciation expense for year 2 under straight-line depreciation?
2. Net income results when:
a. Revenues = Expenses
b. Revenues > Expenses
c. Assets > Liabilities
d. Revenues < Expenses
3. Retained earnings at the end of period is equal to:
a. assets plus liabilities.
b. net income.
c. retained earnings at the beginning of the period plus net income minus liabilities.
d. retained earnings at the beginning of the period plus net income minus dividends.
4. Respective normal account balances of Purchases, Freight-In and Purchases Discount are:
a. debit, credit, debit.
b. credit, debit, debit.
c. credit, credit, credit.
d. debit, debit, credit.
5. Allowance for Doubtful Accounts is essential because
a. a liability results when a credit sale is made.
b. management requires to accumulate all credit losses over the years.
c. when recording uncollectible accounts expense, it is not possible to know which specific accounts will not pay.
d. uncollectible accounts which are written off should be accumulated in a separate account.