Question 1

The balance of the allowance for doubtful accounts is added to accounts receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

During inflationary periods, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO method of costing inventory.

Accepted Answer

A) True 
 B)False

Question 3

Using the lower-of-cost-or-market method of inventory valuation, what should the total inventory value be for the following items: $$\begin{array} { | c | r | l | l | l | l | } 
\hline \text { Item } & \begin{array} { l } 
\text { Inventory } \
\text { Quantity }
\end{array} & \begin{array} { l } 
\text { Unit cost } \
\text { price }
\end{array} & \begin{array} { l } 
\text { Unit market } \
\text { price }
\end{array} & \begin{array} { l } 
\text { Total cost } \
\text { price }
\end{array} & \begin{array} { l } 
\text { Total market } \
\text { price }
\end{array} \
\hline \text { A } & 200 & \$ 5 & \$ 4.50 & \$ 1,000 & \$ 900 \
\hline \mathrm { B } & 100 & 4 & 5.00 & 400 & 500 \
\hline \mathrm { C } & 50 & 7 & 6.50 & 350 & 325 \
\hline
\end{array}$$

Accepted Answer

None

Question 4

The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Accepted Answer

A) True 
 B)False

Question 5

Inventories of merchandising and manufacturing businesses are reported as current assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

Generally accepted accounting principles do not normally allow the use of the allowance method of accounting for uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 7

Blue Jay Inc.reported the following transactions for the month of March:? $$\begin{array} { r l l } 
1 & \text { Beginning inventory } & 15 \text { units at } \$ 6 \text { each } \
5 & \text { Purchase } & 29 \text { units at } \$ 9 \text { each } \
13 & \text { Purchase } & 25 \text { units at } \$ 12 \text { each } \
20 & \text { Purchase } & 15 \text { units at } \$ 14 \text { each } \
31 & \text { Ending inventory } & 30 \text { units }
\end{array}$$ Calculate the cost of ending inventory using the FIFO method.

Accepted Answer

A)  $420 
B)  $390 
C)  $216 
D)  $510 
A)  $420 
B)  $390 
C)  $216 
D)  $510

Question 8

The accounts receivable turnover is computed by dividing:

Accepted Answer

A)  total assets by average accounts receivable. 
B)  net sales by average accounts receivable. 
C)  net income by average accounts receivable. 
D)  net purchases by average accounts receivable. 
A)  total assets by average accounts receivable. 
B)  net sales by average accounts receivable. 
C)  net income by average accounts receivable. 
D)  net purchases by average accounts receivable.

Question 9

When the allowance method for recognising uncollectible accounts receivable is used, the allowance account will have a positive balance at the end of the period if:

Accepted Answer

A)  the write-offs during the period exceed the beginning balance. 
B)  the write-offs are equal to the balance of the account at the beginning of the period. 
C)  the write-offs during the period are less than the beginning balance. 
D)  the write-offs are equal to the difference between the beginning and the ending balance of the account. 
A)  the write-offs during the period exceed the beginning balance. 
B)  the write-offs are equal to the balance of the account at the beginning of the period. 
C)  the write-offs during the period are less than the beginning balance. 
D)  the write-offs are equal to the difference between the beginning and the ending balance of the account.

Question 10

The following data is available for an item of LCC Inc.for the month of March:? $$\begin{array} { r l l } 
\text { March } 1 & \text { Inventory } & 15 \text { units at } \$ 10 \text { each } \
15 & \text { Purchase } & 30 \text { units at } \$ 18 \text { each } \
31 & \text { Purchase } & 20 \text { units at } \$ 15 \text { each } \
& \text { Sale } & 30 \text { units }
\end{array}$$ ? Using the last-in, first-out method, what is ABC Inc.'s cost of ending inventory for March?

Accepted Answer

A)  $450 
B)  $630 
C)  $540 
D)  $510 
A)  $450 
B)  $630 
C)  $540 
D)  $510

Question 11

"Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

Accepted Answer

A) True 
 B)False

Question 12

On the basis of the following data related to current assets for Mission Co.at December 2016, prepare a partial balance sheet in good form. $$\begin{array} { l r } 
\text { Cash and cash equivalents } & \$ 100,000 \
\text { Notes receivable } & 50,000 \
\text { Accounts receivable } & 290,000 \
\text { Allowance for doubtful accounts } & 20,000 \
\text { Interest receivable } & 750 \
\text { Merchandise inventory at lower-of-cost-(first-in, first-out method) or-market } & 120,000
\end{array}$$

Accepted Answer

None

Question 13

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases:
(a)Balance of $3,000 in the allowance account just prior to adjustment.Analysis of accounts receivable indicates doubtful accounts of $25,000.
(b)Balance of $500 in the allowance account just prior to adjustment.Uncollectibles are estimated at 2% of sales, which totaled $800,000 for the year.

Accepted Answer

(a)$22,000

Question 14

The estimate of uncollectible accounts receivable based on the sales method violates the matching principle.

Accepted Answer

A) True 
 B)False

Question 15

The two methods of accounting for uncollectible receivables are the:

Accepted Answer

A)  direct method and the indirect method. 
B)  allowance method and the direct write-off method. 
C)  cash method and the accrual method. 
D)  percent of sales method and the analysis of receivables method. 
A)  direct method and the indirect method. 
B)  allowance method and the direct write-off method. 
C)  cash method and the accrual method. 
D)  percent of sales method and the analysis of receivables method.

Question 16

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Accepted Answer

A) True 
 B)False

Question 17

Beginning inventory, purchases, and sales for Product XCX are as follows: $\begin{array}{lllll}
\text { Oct. } 1 & \text { B eginning Inventory } & 24 \text { units } & \text { at } & \$ 12 \text { each } \
\text { Oct. } 17 & \text { Purchase } & 10 \text { units } & \text { at } & \$ 14 \text { each } \
\text { Oct. } 30 & \text { Sale } & 52 \text { units } & &
\end{array}$ ?
Assuming a periodic inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold for the October 30 sale and (b) the inventory on October 31.

Accepted Answer

(a) Cost o

Question 18

Average cost is a method of inventory valuation.

Accepted Answer

A) True 
 B)False

Question 19

A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):

Accepted Answer

A)  $10,000. 
B)  $10,800. 
C)  $10,200. 
D)  $9,800. 
A)  $10,000. 
B)  $10,800. 
C)  $10,200. 
D)  $9,800.

Question 20

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?

Accepted Answer

A)  Increase Uncollectible Accounts Expense, $14,000; increase Allowance for Doubtful Accounts, $14,000 
B)  Decrease Allowance for Doubtful Accounts, $14,000; decrease Uncollectible Accounts Expense, $14,000 
C)  Decrease Allowance for Doubtful Accounts, $11,800; decrease Uncollectible Accounts Expense, $11,800 
D)  Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800 
A)  Increase Uncollectible Accounts Expense, $14,000; increase Allowance for Doubtful Accounts, $14,000 
B)  Decrease Allowance for Doubtful Accounts, $14,000; decrease Uncollectible Accounts Expense, $14,000 
C)  Decrease Allowance for Doubtful Accounts, $11,800; decrease Uncollectible Accounts Expense, $11,800 
D)  Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800

The balance of the allowance for doubtful accounts is added to accounts receivable on the balance sheet.

During inflationary periods, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO method of costing inventory.

Using the lower-of-cost-or-market method of inventory valuation, what should the total inventory value be for the following items: Item Inventory Quantity Unit cost price Unit market price Total cost price Total market price A 200 \ 5 \ 4.50 \ 1,000 \ 900 100 4 5.00 400 500 50 7 6.50 350 325

The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Inventories of merchandising and manufacturing businesses are reported as current assets on the balance sheet.

Generally accepted accounting principles do not normally allow the use of the allowance method of accounting for uncollectible accounts.

The accounts receivable turnover is computed by dividing:

When the allowance method for recognising uncollectible accounts receivable is used, the allowance account will have a positive balance at the end of the period if:

The following data is available for an item of LCC Inc.for the month of March:? March 1 Inventory 15 units at \ 10 each 15 Purchase 30 units at \ 18 each 31 Purchase 20 units at \ 15 each Sale 30 units ? Using the last-in, first-out method, what is ABC Inc.'s cost of ending inventory for March?

"Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

The estimate of uncollectible accounts receivable based on the sales method violates the matching principle.

The two methods of accounting for uncollectible receivables are the:

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Average cost is a method of inventory valuation.

A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 6: Receivables and Inventories

The balance of the allowance for doubtful accounts is added to accounts receivable on the balance sheet.

During inflationary periods, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO method of costing inventory.

Using the lower-of-cost-or-market method of inventory valuation, what should the total inventory value be for the following items: Item Inventory Quantity Unit cost price Unit market price Total cost price Total market price A 200 \ 5 \ 4.50 \ 1,000 \ 900 100 4 5.00 400 500 50 7 6.50 350 325

The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Inventories of merchandising and manufacturing businesses are reported as current assets on the balance sheet.

Generally accepted accounting principles do not normally allow the use of the allowance method of accounting for uncollectible accounts.

The accounts receivable turnover is computed by dividing:

When the allowance method for recognising uncollectible accounts receivable is used, the allowance account will have a positive balance at the end of the period if:

The following data is available for an item of LCC Inc.for the month of March:? March 1 Inventory 15 units at \ 10 each 15 Purchase 30 units at \ 18 each 31 Purchase 20 units at \ 15 each Sale 30 units ? Using the last-in, first-out method, what is ABC Inc.'s cost of ending inventory for March?

"Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

The estimate of uncollectible accounts receivable based on the sales method violates the matching principle.

The two methods of accounting for uncollectible receivables are the:

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

Average cost is a method of inventory valuation.

A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters