Question 1

The accounts receivable turnover and inventory turnover ratios are used to analyze

Accepted Answer

A) Long-term solvency 
B) Profitability 
C) Liquidity 
D) Leverage 
A) Long-term solvency 
B) Profitability 
C) Liquidity 
D) Leverage C

Question 2

A common measure of liquidity is

Accepted Answer

A) Return on assets. 
B) Accounts receivable turnover. 
C) Profit margin. 
D) Debt to equity. 
A) Return on assets. 
B) Accounts receivable turnover. 
C) Profit margin. 
D) Debt to equity. B

Question 3

Which of the following inventory cost flow methods involves computations based on broad inventory pools of similar items?

Accepted Answer

A) Regular quantity of goods LIFO 
B) Dollar-value LIFO 
C) Weighted average 
D) Moving average 
A) Regular quantity of goods LIFO 
B) Dollar-value LIFO 
C) Weighted average 
D) Moving average B

Question 4

If inventory levels are stable or increasing an argument that favors the FIFO method as compared to LIFO is

Accepted Answer

A) Income taxes tend to be reduced in periods of rising prices 
B) Cost of goods sold tends to be stated at approximately current cost in the income statement 
C) Cost assignments typically parallel the physical flow of the goods 
D) Income tends to be smoothed as prices change over time 
A) Income taxes tend to be reduced in periods of rising prices 
B) Cost of goods sold tends to be stated at approximately current cost in the income statement 
C) Cost assignments typically parallel the physical flow of the goods 
D) Income tends to be smoothed as prices change over time

Question 5

A high accounts receivable turnover ratio indicates

Accepted Answer

A) Customers are making payments quickly 
B) A large portion of the company's sales are on credit 
C) Many customers are not paying their receivables in a timely manner 
D) The company's sales have increased 
A) Customers are making payments quickly 
B) A large portion of the company's sales are on credit 
C) Many customers are not paying their receivables in a timely manner 
D) The company's sales have increased

Question 6

What is a possible reason for accounts receivable turnover to increase from one year to the next year?

Accepted Answer

A) Improved collection process. 
B) Granting credit to customers with lower credit quality. 
C) Decreased credit sales during a recession. 
D) Write-off uncollectible receivables. 
A) Improved collection process. 
B) Granting credit to customers with lower credit quality. 
C) Decreased credit sales during a recession. 
D) Write-off uncollectible receivables.

Question 7

Increasing a credit period from 30 to 60 days,in response to a similar action taken by company's competitors,would likely result in:

Accepted Answer

A) An increase in the average collection period. 
B) A decrease in bad debt losses. 
C) An increase in sales. 
D) Higher profits. 
A) An increase in the average collection period. 
B) A decrease in bad debt losses. 
C) An increase in sales. 
D) Higher profits.

Question 8

Jamison Corporation's inventory cost on its statement of financial position was lower using first-in,first-out than last-in,first-out.Assuming no beginning inventory,what direction did the cost of purchases move during the period?

Accepted Answer

A) Up 
B) Down 
C) Steady 
D) Cannot be determined 
A) Up 
B) Down 
C) Steady 
D) Cannot be determined

Question 9

Working capital is a measure of

Accepted Answer

A) Financial flexibility 
B) Liquidity. 
C) Profitability. 
D) Solvency. 
A) Financial flexibility 
B) Liquidity. 
C) Profitability. 
D) Solvency.

Question 10

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Accepted Answer

A) FIFO 
B) LIFO 
C) Conventional retail 
D) Weighted average 
A) FIFO 
B) LIFO 
C) Conventional retail 
D) Weighted average

Question 11

The current ratio is

Accepted Answer

A) 1.86: 1. 
B) 2.00: 1. 
C) 3.38: 1. 
D) 2.93: 1. 
A) 1.86: 1. 
B) 2.00: 1. 
C) 3.38: 1. 
D) 2.93: 1.

Question 12

An account that would be classified as a current liability is

Accepted Answer

A) Dividends payable in stock 
B) Accounts payable - debit balance 
C) Reserve for possible losses on purchase commitments 
D) Excess of replacement cost over LIFO cost of basic inventory temporarily liquidated 
A) Dividends payable in stock 
B) Accounts payable - debit balance 
C) Reserve for possible losses on purchase commitments 
D) Excess of replacement cost over LIFO cost of basic inventory temporarily liquidated

Question 13

Why is the allowance method preferred over the direct write-off method of accounting for bad debts?

Accepted Answer

A) Determining worthless accounts under direct write-off method is difficult to do. 
B) Improved matching of bad debt expense with revenue. 
C) Allowance method is used for tax purposes. 
D) Estimates are used. 
A) Determining worthless accounts under direct write-off method is difficult to do. 
B) Improved matching of bad debt expense with revenue. 
C) Allowance method is used for tax purposes. 
D) Estimates are used.

Question 14

Which of the following methods of determining annual bad debt expense best achieves the matching concept?

Accepted Answer

A) Percentage of average accounts receivable 
B) Direct write-off 
C) Percentage of sales 
D) Percentage of ending accounts receivable 
A) Percentage of average accounts receivable 
B) Direct write-off 
C) Percentage of sales 
D) Percentage of ending accounts receivable

Question 15

Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory Cost of Goods Sold

Accepted Answer

A) FIFO LIFO 
B) LIFO FIFO 
C) LIFO LIFO 
D) FIFO FIFO 
A) FIFO LIFO 
B) LIFO FIFO 
C) LIFO LIFO 
D) FIFO FIFO

Question 16

The net realizable value of receivables is calculated as the face value of the receivables less adjustments for

Accepted Answer

A) Credit sales 
B) Actual uncollected amounts adjusted for purchase discounts. 
C) Bad debts already written off. 
D) Estimated uncollectible accounts 
A) Credit sales 
B) Actual uncollected amounts adjusted for purchase discounts. 
C) Bad debts already written off. 
D) Estimated uncollectible accounts

Question 17

The advantage of relating a company's bad debt experience to its accounts receivable is that this approach

Accepted Answer

A) Gives a reasonable correct statement of receivables in the balance sheet 
B) Relates bad debts expense to the period of sale 
C) Is the only generally accepted method for valuing accounts receivable 
D) Makes estimates of uncollectible accounts unnecessary 
A) Gives a reasonable correct statement of receivables in the balance sheet 
B) Relates bad debts expense to the period of sale 
C) Is the only generally accepted method for valuing accounts receivable 
D) Makes estimates of uncollectible accounts unnecessary

Question 18

Of the following items,the one that should be classified as a current asset is

Accepted Answer

A) Trade installment receivables normally collectible in 18 months 
B) Cash designated for the redemption of callable preferred stock 
C) Cash surrender value of a life insurance policy of which the company is beneficiary 
D) A deposit on machinery ordered,delivery of which will be made within six months 
A) Trade installment receivables normally collectible in 18 months 
B) Cash designated for the redemption of callable preferred stock 
C) Cash surrender value of a life insurance policy of which the company is beneficiary 
D) A deposit on machinery ordered,delivery of which will be made within six months

Question 19

When the allowance method of recognizing bad debt expense is used,the entries at the time of collection of an account previously written off would

Accepted Answer

A) Increase net income 
B) Have no effect on total current assets 
C) Increase working capital 
D) Decrease total current liabilities 
A) Increase net income 
B) Have no effect on total current assets 
C) Increase working capital 
D) Decrease total current liabilities

Question 20

The original cost of an inventory item is above the replacement cost.The replacement cost is below the net realizable value less the normal profit margin.Under the lower of cost or market method the inventory item should be priced at its

Accepted Answer

A) Original cost 
B) Replacement cost 
C) Net realizable value 
D) Net realizable value less the normal profit margin 
A) Original cost 
B) Replacement cost 
C) Net realizable value 
D) Net realizable value less the normal profit margin

The accounts receivable turnover and inventory turnover ratios are used to analyze

A common measure of liquidity is

Which of the following inventory cost flow methods involves computations based on broad inventory pools of similar items?

If inventory levels are stable or increasing an argument that favors the FIFO method as compared to LIFO is

A high accounts receivable turnover ratio indicates

What is a possible reason for accounts receivable turnover to increase from one year to the next year?

Increasing a credit period from 30 to 60 days,in response to a similar action taken by company's competitors,would likely result in:

Jamison Corporation's inventory cost on its statement of financial position was lower using first-in,first-out than last-in,first-out.Assuming no beginning inventory,what direction did the cost of purchases move during the period?

Working capital is a measure of

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

The current ratio is

An account that would be classified as a current liability is

Why is the allowance method preferred over the direct write-off method of accounting for bad debts?

Which of the following methods of determining annual bad debt expense best achieves the matching concept?

Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory Cost of Goods Sold

The net realizable value of receivables is calculated as the face value of the receivables less adjustments for

The advantage of relating a company's bad debt experience to its accounts receivable is that this approach

Of the following items,the one that should be classified as a current asset is

When the allowance method of recognizing bad debt expense is used,the entries at the time of collection of an account previously written off would

The original cost of an inventory item is above the replacement cost.The replacement cost is below the net realizable value less the normal profit margin.Under the lower of cost or market method the inventory item should be priced at its

The Development of Accounting Theory

The Pursuit of the Conceptual Framework

International Accounting

Research Methodology and Theories on the Uses of Accounting Information

Income Concepts, Revenue Recognition and Matching

Financial Statement I: the Income Statement

Financial Statements Ii: the Balance Sheet and the Statement of Cash Flows

Long-Term Assets I: Property, Plant, and Equipment

Long-Term Assets Ii: Investments and Intangibles

Long-Term Liabilities

Accounting for Income Taxes

Leases

Pensions and Other Postretirement Benefits

Equity

Accounting for Multiple Entities

Financial Reporting Disclosure Requirements and Ethical Responsibilities

Filters

Exam 8: Working Capital

The accounts receivable turnover and inventory turnover ratios are used to analyze

A common measure of liquidity is

Which of the following inventory cost flow methods involves computations based on broad inventory pools of similar items?

If inventory levels are stable or increasing an argument that favors the FIFO method as compared to LIFO is

A high accounts receivable turnover ratio indicates

What is a possible reason for accounts receivable turnover to increase from one year to the next year?

Increasing a credit period from 30 to 60 days,in response to a similar action taken by company's competitors,would likely result in:

Jamison Corporation's inventory cost on its statement of financial position was lower using first-in,first-out than last-in,first-out.Assuming no beginning inventory,what direction did the cost of purchases move during the period?

Working capital is a measure of

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

The current ratio is

An account that would be classified as a current liability is

Why is the allowance method preferred over the direct write-off method of accounting for bad debts?

Which of the following methods of determining annual bad debt expense best achieves the matching concept?

Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory Cost of Goods Sold

The net realizable value of receivables is calculated as the face value of the receivables less adjustments for

The advantage of relating a company's bad debt experience to its accounts receivable is that this approach

Of the following items,the one that should be classified as a current asset is

When the allowance method of recognizing bad debt expense is used,the entries at the time of collection of an account previously written off would

The original cost of an inventory item is above the replacement cost.The replacement cost is below the net realizable value less the normal profit margin.Under the lower of cost or market method the inventory item should be priced at its

The Development of Accounting Theory

The Pursuit of the Conceptual Framework

International Accounting

Research Methodology and Theories on the Uses of Accounting Information

Income Concepts, Revenue Recognition and Matching

Financial Statement I: the Income Statement

Financial Statements Ii: the Balance Sheet and the Statement of Cash Flows

Long-Term Assets I: Property, Plant, and Equipment

Long-Term Assets Ii: Investments and Intangibles

Long-Term Liabilities

Accounting for Income Taxes

Leases

Pensions and Other Postretirement Benefits

Equity

Accounting for Multiple Entities

Financial Reporting Disclosure Requirements and Ethical Responsibilities

Filters