Exam 6: Receivables and Inventories

The direct write-off method records uncollectible accounts expense in the year the specific account receivable is determined to be uncollectible.

Lower-of-cost-or-market is a method of inventory valuation.

Receivables are usually a significant portion of:

The due date of a 90-day note dated June 10 is September 8. (Assume 360 days in a year)

A written promise to pay a sum of money on demand or at a definite time is called a(n):

Beginning inventory, purchases, and sales for Product XCX are as follows: \ 12 each at 24 units Begiming Inventory Oct. 1 \ 14 each at 10 units Purchase Oct. 17 52 units Sale Oct. 30 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.

Beginning inventory, purchases and sales data for the month are as follows: 10 units at \ 42 each Beginning Inventory 15 units at \ 44 each First Purchase 13 units at \ 45 each Second Purchase 26 units Sales Determine the total cost of ending inventory according to (a) FIFO method and (b) LIFO method.

The process of a company selling its accounts receivable to another company is referred as:

Prepare the Current Assets section of a balance sheet using some or all of the following accounts: Cash Property, Plant, and Equipment Accounts Receivable Notes Receivable--90-day note Merchandise Inventory Allowance for Doubtful Accounts Interest Receivable Prepaid Advertising Sales Returns and Allowances

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

In reference to a promissory note, the person who makes the promise to pay is called the:

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

At the end of a period before the accounts are adjusted, Allowance for Doubtful Accounts has a balance of $250, and net sales on account for the period total $500,000. If uncollectible accounts expense is estimated at 1% of net sales on account, the current provision to be made for uncollectible accounts expense is $4,997.50.

One of the weaknesses of the direct write-off method is that it:

Allowance for Doubtful Accounts has an unadjusted balance of $800 at the end of the year, and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000. Which of the following records the proper provision for doubtful accounts?

Allowance for Doubtful Accounts is listed on the balance sheet under the caption:

The units of Product YY2 available for sale during the year were as follows: \ 30 each at 16 units Inventory Apr. 1 \ 33 each at 30 units Purchase Jun. 16 \ 37 each at 45 units Purchase Sep. 28 There are 17 units of the product in the physical ending inventory at March 31. The periodic inventory system is used. Determine the ending inventory cost by (a) FIFO, (b) LIFO, and (c) average cost methods.

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

Of the three widely used inventory costing methods (FIFO, LIFO, and average), the FIFO method of costing inventory is based on the assumption that costs are charged against revenues in the order in which they were incurred.

During a period of consistently rising prices, the method of inventory costing that will result in reporting the greatest cost of merchandise sold is: