The purchases journal is used to record:
A. credit sales
B. cash receipts
C. cash purchases
D. credit purchases (purchases on account)
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The type of account with a normal credit balance is
A. an asset
B. drawing
C. a revenue
D. an expense
On a multiple-step income statement, the excess of net sales over the cost of merchandise sold is called:
A. operating income
B. income from operations
C. gross profit
D. net income
Which of the following items represents a deferral?
A. Prepaid insurance
B. Wages payable
C. Fees earned
D. Accumulated depreciation
A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This would:
A. understate net income by $350,000
B. overstate net income by $350,000
C. have no effect on net income
D. understate assets by $350,000