Which of the Following Assets Does a Merchandising Company-But NOT

question 138

Multiple Choice

Which of the following assets does a merchandising company-but NOT a service company-need?

• A) Accounts receivable
• B) Prepaid insurance
• C) Merchandise inventory
• D) Equipment

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Definitions:

End-Of-Period Adjusting Entries

Entries recorded in journals at the close of an accounting cycle to refresh the balances of accounts prior to the compilation of financial statements.

Supplies Account

An account used in accounting to track the amount spent on supplies that have not yet been used.

Depreciation

The process of allocating the cost of a tangible asset over its useful life to account for declines in value over time.

Matching Statements

Accounting principles that dictate expenses should be matched with the revenues they helped to generate, ensuring accurate income statements.