Question 1

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

Question 2

Use the following data to calculate cost of merchandise sold under FIFO method. $\begin{array}{lll}
15 \text { units at } \$ 20 \text { each } & \text { Beginning Inventory } & \text { September 1 } \
20 \text { units at } \$ 25 \text { each } & \text { Purchase } & \text { September 10 } \
25 \text { units at } \$ 28 \text { each } & \text { Purchase } & \text { September } 20 \
30 \text { units } & \text { Ending Inventory } & \text { September } 30
\end{array}$

Accepted Answer

A)  $825 
B)  $750 
C)  $675 
D)  $600

Question 3

When companies sell their receivables to other companies, the transaction is called factoring.

Accepted Answer

A) True 
 B)False

Question 4

Under the direct write-off method, an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.

Accepted Answer

A) True 
 B)False

Question 5

A note receivable due in 90 days is listed on the balance sheet under:

Accepted Answer

A)  long-term liabilities. 
B)  fixed assets. 
C)  current liabilities. 
D)  current assets.

Question 6

The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

Accepted Answer

A) True 
 B)False

Question 7

Inventory costing methods place primary emphasis on assumptions about:

Accepted Answer

A)  flow of goods. 
B)  flow of costs. 
C)  flow of goods or costs depending on the method. 
D)  flow of values.

Question 8

A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account. The face value of the note is:

Accepted Answer

A)  $6,100. 
B)  $5,400. 
C)  $5,900. 
D)  $6,000.

Question 9

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases:
 (a)Balance of $ \$ 500 $ in the allowance account just prior to adjustment. Andysis of accountsreceivable indicates doubtful accounts of $ \$ 9,500 $.

(b)Balance of $ \$ 950 $ in the allowance account just prior to adjustment. Uncollectibles are estimated at $ 3.5 \% $ of sales, which totaled $ \$ 1,000,000 $ for the year.

Accepted Answer

The answer of Determine the amount to be added to...

Question 10

All receivables that are expected to be realized in cash within a year are presented in the current assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

After the accounts are adjusted at the end of the fiscal year, Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a balance of $30,000. What is the net realizable value of the receivables?

Accepted Answer

A)  $30,000 
B)  $460,000 
C)  $430,000 
D)  $400,000

Question 12

"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 13

Receivables not expected to be collected within one year are reported in the fixed assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

The inventory data for an item for November are: $\begin{array}{lll}
25 \text { units at } \$ 20 \text { each } & \text { Inventory } & \text { Nov. } 1 \
30 \text { units at } \$ 21 \text { each } & \text { Purchase } & 10 \
10 \text { units at } \$ 22 \text { each } & \text { Purchase } & 30 \
35 \text { units } & \text { Sale } &
\end{array}$ Using the last-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?

Accepted Answer

A)  $640 
B)  $630 
C)  $600 
D)  $605

Question 15

Merchandise inventory is reported on the balance sheet in the section entitled:

Accepted Answer

A)  current assets. 
B)  fixed assets. 
C)  current liabilities. 
D)  stockholders' equity.

Question 16

In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct cost of disposal.

Accepted Answer

A) True 
 B)False

Question 17

A note receivable due in five years is listed on the balance sheet under the caption:

Accepted Answer

A)  investments. 
B)  current assets. 
C)  fixed assets. 
D)  stockholders' equity.

Question 18

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.

Question 19

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $950,000, the amount of the adjustment to record the provision for doubtful accounts is:

Accepted Answer

A)  $9,500. 
B)  $500. 
C)  $8,500. 
D)  $9,000.

Question 20

The balance of the allowance for doubtful accounts is deducted from accounts receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Exam 6: Receivables and Inventories

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?

When companies sell their receivables to other companies, the transaction is called factoring.

Under the direct write-off method, an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.

A note receivable due in 90 days is listed on the balance sheet under:

The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

Inventory costing methods place primary emphasis on assumptions about:

A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account. The face value of the note is:

All receivables that are expected to be realized in cash within a year are presented in the current assets section of the balance sheet.

After the accounts are adjusted at the end of the fiscal year, Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a balance of $30,000. What is the net realizable value of the receivables?

"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.

Receivables not expected to be collected within one year are reported in the fixed assets section of the balance sheet.

Merchandise inventory is reported on the balance sheet in the section entitled:

In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct cost of disposal.

A note receivable due in five years is listed on the balance sheet under the caption:

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 $500 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $950,000, the amount of the adjustment to record the provision for doubtful accounts is:

The balance of the allowance for doubtful accounts is deducted from accounts receivable on the balance sheet.