Statement 1: The worksheet of a merchandising entity has more accounts than that of a service entity. Statement 2: The reversing entries for merchandising entities are different from that of a service entity. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect. Statement 1: A loss occurs when there are more expenses than revenue. Statement 2: An income statement cannot be prepared correctly until all the accounts have been adjusted. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.

Statement 1: The worksheet of a merchandising entity has more accounts than that of a service entity. Statement 2: The reversing entries for merchandising entities are different from that of a service entity. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect. Statement 1: A loss occurs when there are more expenses than revenue. Statement 2: An income statement cannot be prepared correctly until all the accounts have been adjusted. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.

College Accounting (Book Only): A Career Approach

12th Edition

ISBN:9781305084087

Author:Cathy J. Scott

Publisher:Cathy J. Scott

Chapter3: The General Journal And The General Ledger

Section: Chapter Questions

Problem 7E: Determine the effect of the following errors on a companys total revenue, total expenses, and net...

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Similar questions

Determine the effect of the following errors on a companys total revenue, total expenses, and net income. Indicate the effect by writing O for Overstated (too much), U for Understated (too little), or NA for Not Affected.
In income statement columns of the worksheet, when total credits exceed total debits, there is * Wrong calculation Loss O Profit O Error
1. What is a Statement of Comprehensive Income? 2. Why are the accounts found under the SCI are called temporary accounts? 3. What are the two forms of SCI? Differentiate one from the other. 4. What is the difference between the SCI of a service entity from a merchandising entity? 5. What is the formula in computing Net Income (Loss) for Service Entities? 6. What is the formula in computing Net Sales? 7. What is the formula in computing Cost of Goods Sold?
How can you identify possible causes for the out of balance amount if "Sales Detail Report" and "Purchase Detail Report" are out of balance in MYOB? There are a few different reasons as to why the out of balance amount might happen. Explain three possible causes for the out of balance amount.
Indicate whether each statement best describes the allowance method or the direct write-off method. List 1. Does not predict bad debts expense. 2. Accounts receivable on the balance sheet is reported at net realizable value. 3. The write-off of a specific account does not affect net income. 4. When an account is written off, the debit is to Bad Debts Expense. 5. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale. 6. Estimates bad debts expense related to the sales recorded in that period. Method Allowance Direct write-off
What is the effect on net income if a company fails to record a purchase in transit (FOB shipping point) and also fails to include the purchase in physical inventory? Income is understated. Income is overstated. Not enough information is provided to determine the answer. Income is correct.
Interest expense is listed on the Income Statement in 'Other revenue and Expenses'. Assess the truth of this statement. Group of answer choices This statement is true. This statement is false. There is not enough information to determine whether or not this statement is true. This statement is not applicable to accounting concepts.
Due to this accounting principle I postpone the moment I reveal expenses on my goods to the moment I sell these good i.e. until the moment I am able to identify the corresponding revenue. This principle is called Select one: a. full disclosure principle b. revenue recognition principle c. consistency principle d. matching principle
The normal balance of the account "Sales Allowances" is a Debit; it is a contra revenue account to Sales Revenue OB. Credit; it is a contra asset account to Accounts Receivable OC. Debit, it is an expense in the income statement OD. Credit, it is a contra expense account to Bad Debt Expense -because A.
Due to this accounting principle I postpone the moment I reveal expenses on my goods to the moment I sell these good i.e. until the moment I am able to identify the corresponding revenue. This principle is called Select one: O a. revenue recognition principle O b. consistency principle O c. full disclosure principle O d. matching principle
Which situation indicates a net loss within the Income Statement section of the worksheet? a. Total credits exceed total debits b. Total debits exceed total credits c. Total debits equal total credits d. None of the above
The concept of materiality: a Treats as material only those items that are greater than 2% or 3% of net income. b Justifies ignoring the matching principle in certain circumstances. c Affects only items reported in the income statement. d Results in financial statements that are less useful to decision makers because many details have been omitted.