Question

please provide answers with explanations

Determine whether each of the following is true or false. If the period revenues are greater than the period expenses, and there are no gains or losses, then Retained Earnings must increase during the period In a post-closing trial balance, revenue and expense accounts must have a zero balance.. If debits equal credits on the trial balance, you still cannot know with certainty that your records are correct. The percentage used to estimate the bad debt expense using the percentage of sales method will always exceed the percentage used to estimate the bad debt expense using the percentage of accounts receivable method If prices are increasing then FIFO, compared with LIFO, will show a higher net income for the period At the end of the second year of ownership of a long-term asset, before the closing entry is made, the balance in the accumulated depreciation account must be equal to or greater than the balance in the depreciation expense account. 2 3

Answer 1

1.True,

Revenue – Expenses = Net Income

Net Income is added to the retained earnings

Hence, if revenues are greater than expenses, retained earnings must increase

2.True,

The post-closing trial balance contains no revenue, expense, gain, balances, since these temporary accounts are closed in post closing trial balance and their balances are moved into the retained earnings

3.True,

They can be mistakes such that mistakes on debut offset the mistakes on the credit side. In such a case, the debits would match credits, but it would still be incorrect.

4.True,

Since sales will always be more than accounts receivables as it will contain cash sales as well.

If same percentage is used, % on sales will be a higher figure

5.True,

In increasing prices, inventory bought earlier will be less costly than inventory purchased later and hence, FIFO will result in lower COGS and higher net income

6.True,

Accumulated depreciation account contains the sum of depreciation charged till date. Depreciation expense contains the amount of depreciation charged only for the year