Question

Question 1.

A writeoff of an account under the direct write-off method would cause total current assets to be:

		smaller
		larger
		unknown.
		unchanged.

Question 2.

When completing a bank reconciliation, outstanding checks should be:

		added to the balance per bank statement.
		deducted from the balance per bank statement.
		added to the balance per books.
		deducted from the balance per books.

Question 3.

Marg Bakery has total assets of $50,000. Baking equipment is purchased for $5,000 on account. After the purchase, total assets are:

		$55,000.
		$45,000.
		$50,000.
		$5,000.
		none of the above.

Question 4. Mary Company, with total assets of $20,000, earns $5,000 of service revenue on account.

		Total assets are still $20,000.
		Total assets are now $25,000.
		Total assets are now $15,000.
		Owners' equity is $5,000 less.
		None of the above are correct.

When completing a bank reconciliation, a customer's check returned marked NSF should be:

		added to the balance per bank statement.
		deducted from the balance per bank statement.
		added to the balance per books.
		deducted from the balance per books.

Answer 1

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Question 1.
A write-off of an account under the direct write-off method would cause total current assets to be:
Under direct write off method allowance for doubtful debts is not created and bad debt expense is adjusted directly from accounts receivable. So total current assets will decrease.
So answer is option a			smaller
Question 2.
When completing a bank reconciliation, outstanding checks should be:
deducted from the balance per bank statement.
Question 3.
Marg Bakery has total assets of $50,000. Baking equipment is purchased for $5,000 on account. After the purchase, total assets are:
As the asset is purchased on account so both assets and liabilities will increase by $ 5000. So total assets would be $ 55000.
So answer is option a			55,000.00
Question 4. Mary Company, with total assets of $20,000, earns $5,000 of service revenue on account.
As the service revenue is earned on account so both assets and revenue will increase by $ 5000. So total assets would be $ 25000.
So answer is option b			Total assets are now $25,000.
When completing a bank reconciliation, a customer's check returned marked NSF should be:
deducted from the balance per books.