Accounting Test #3

Front 1

On a company's bank reconciliation a NSF check was correctly deducted on the book side. The resulting journal entry related to the NSF check described above would require a:

Back 1

Debit to "Accounts Receivable"

Front 2

Taylor Company has exhausted all collection options on Mr. Deadbeat's past due account receivable. the entry to 'write off' the account will:

Back 2

decrease "Allowance for Doubtful Accounts"

Front 3

Which of the following does not change the balance in accounts receivable?

Back 3

Bad debts expense adjusting entry

Front 4

Which of the following arrangements involving financing receivables would result in the company obtaining financing recording a liability?

Back 4

Factoring with recourse

Front 5

Which of the following is considered a sale of receivables?

Back 5

Factoring receivables without recourse

Front 6

Which of the following inventory methods is not acceptable for external reporting purposes?

Back 6

Gross margin method

Front 7

The lower of cost or market rule for inventory is an example of which accounting principle?

Back 7

Conservatism

Front 8

The physical count of ending inventory was overstated by $85,000. Which of the following statements is TRUE about the impact of the error?

Back 8

Current year net income will be overstated

Front 9

Current Inventory cost reflected on the income statement

Back 9

lifo

Front 10

Current inventory cost reflected on the balance sheet

Back 10

fifo

Front 11

Usually represents the actual physical flow of goods

Back 11

fifo

Front 12

Inventory represents a mixture of costs.

Back 12

average costs

Front 13

Often adopted to reduce income taxes.

Back 13

lifo

Front 14

Results in many price layers of inventory making it costly to maintain.

Back 14

lifo

Front 15

If prices are increasing, more likely to be chosen if management's bonuses are based on a percentage of net income.

Back 15

fifo

Front 16

IRS requires this method to be used for financial statement purposes if it is used for tax purposes.

Back 16

lifo

Front 17

Inventory records are continually adjusted for each transaction: sale, return, purchase

Back 17

perpetual

Front 18

Cost of goods sold is computed at the time of the sale and is an account

Back 18

perpetual

Front 19

Cost of goods sold is computed at the end of the period after a physical count of inventory is taken

Back 19

Periodic

Front 20

Purchases account is debited when merchandise is bought

Back 20

periodic

Front 21

A physical count of inventory is never needed.

Back 21

neither

Front 22

Inventory account is a current asset on the balance sheet.

Back 22

both