Exam 5: Accounting for and Presentation of Current Assets

With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

The inventory cost flow assumption describes the flow of product cost:

The balance sheet presentation of accounts receivable net of the allowance for doubtful accounts has the effect of stating accounts receivable at:

A firm has used LIFO for several years during which costs have trended higher. If this firm achieves a substantial reduction in inventory quantities in 2014 by selling more merchandise than it purchases, the effect on 2014 net income of the inventory reduction, compared to having no change in inventory quantity from the beginning to the end of 2014, is:

One of the most important reasons for having a system of internal control is to:

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

Trading and Available-for-Sale securities are reported on the balance sheet at:

A firm has used LIFO for several years during which costs have trended higher. The effect on 2014 net income using LIFO, relative to FIFO, will be:

Which of the following is the correct balance sheet presentation for current assets?

The valuation of short-term marketable securities on the balance sheet is likely to be for an amount that is approximately equal to the cost of these investments because:

The following are data available for Richards Co. for the month of May: Sales 560 units Beginning inventory 100 units @ \ 1.25 Purchases, in chronological order 250 units @ \ 1.30 200 units@ \ 1.40 350 units @ \ 1.50 Calculate cost of goods sold and ending inventory under the following cost flow assumptions: (1.) Weighted average (2.) FIFO (3.) LIFO

Which of the following is (are) true regarding cost flow assumptions?

Prepaid expenses classified as current assets represent:

Prepare a bank reconciliation for Grace, Inc., as of January 31, from the following information: (a.) The January 31 cash balance in the general ledger is $2,544. (b.) The January 31 balance shown on the bank statement is $2,272. (c.) Checks issued but not returned with the bank statement were No. 435 for $226 and No. 448 for $91. (d.) A deposit made on January 31 for $640 was included in the general ledger balance but not in the bank statement balance. (e.) Interest credited to the account during January but not recorded on the company's books amounted to $36. (f.) A bank charge of $12 for printing new checks was made to the account during January. Although the company was expecting a charge, the amount was not known until the bank statement arrived. (g.) In the process of reviewing canceled checks, it was determined that a check issued to a supplier in payment of an account payable of $125 was recorded as a $152 cash disbursement. Required: (1.) Prepare the bank reconciliation for Grace, Inc., as of January 31. (2.) Prepare the appropriate adjusting entry(ies) or show the reconciling items in a horizontal model for Grace, Inc., related to the bank reconciliation.

On January 1, 2014, the balance in Great Lakes Co.'s Allowance for Bad Debts account was $5,200. During the year, a total of $3,500 of delinquent accounts receivable were written off as bad debts. The balance in the Allowance for Bad Debts account at December 31, 2014, was $7,300. (a.) What was the total amount of bad debts expense recognized during the year? (b.) As a result of a comprehensive analysis, it is determined that the December 31, 2014, balance of Allowance for Bad Debts should be $6,300. Show, in general journal format the adjustment required.

When a firm uses the LIFO inventory cost flow assumption:

The reason for recording a prepaid expense as a current asset is:

The following are data available for Blue Grass for the month of June: Sales 1,200 units Beginning inventory 300 units @\ 4.00 Purchases, in chronological order 600 units @\ 4.20 400 units @ \4 .40 500 units @\ 4.50 (a.) Calculate cost of goods sold and ending inventory under the following cost flow assumptions: (1.) Weighted-average (2.) FIFO (3.) LIFO (b.) Assume net income using the weighted average cost flow assumption was $6,400. Calculate net income under FIFO and LIFO.

The accounting concept or principle applied when the cost of short-term marketable securities is adjusted to market value is:

The effect of an error resulting in an understatement of ending inventory is to: