On a bank reconciliation, deposits in transit are o (no answer) deducted from the bank balance. deducted from the book balance. • added to the bank balance. • added to the book balance. 22. 2 point(s) Under the LCM (lower-of-cost-or-market) approach, the market value is defined as o (no answer) • current replacement cost. FIFO cost. . selling price. .. LIFO cost. Which of the following reflect the balances of prepayment accounts prior to adjustment? 0 (no answer) • Balance sheet accounts are understated and income statement accounts are understated. • Balance sheet accounts are overstated and income statement accounts are overstated. © Balance sheet accounts are overstated and income statement accounts are understated. Balance sheet accounts are understated and income statement accounts are overstated. 2 point(s) 24. In which journal would a cash purchase of inventory be recorded? 0 (no answer) • Cash payments journal • None of these Purchase journal General journal Gross profit does not appear o (no answer) on a single-step income statement. to be relevant in analyzing the operation of a merchandiser. on a multiple-step income statement. on the income statement if the periodic inventory system is used because it cannot be calculated. 26. 2 point(s) The cost principle requires that when assets are acquired, they be recorded at o (no answer) • appraisal value. • market price. book value. cost. After gross profit is calculated, operating expenses are deducted to determine O (no answer) • gross profit on sales. • gross margin. net income. . net margin. 30. 2 point(s) Cost of goods sold is determined only at the end of the accounting period in o (no answer) a perpetual inventory system. • neither a perpetual nor a periodic inventory system. both a perpetual and a periodic inventory system. a periodic inventory system. Which account below is not a subdivision of owner's equity? o (no answer) Revenues • Expenses • Drawings • Liabilities 32. 2 point(s) Which of the following statements is not true? o (no answer) • Expenses decrease owner's equity. • Expenses increase owner's equity. • Expenses are a negative factor in the computation of net income. • Expenses have normal debit balances.