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Q1. Allowance for Doubtful Accounts is a contra-equity account.

a. true

b. false

Q2. After the accounts are adjusted and closed 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 accounts receivable?

a. $30,000

b. $460,000

c. $430,000

d. $400,000

Q3. One of the weaknesses of the direct write-off method is that it

a. understates accounts receivable on the balance sheet.

b. violates the matching principle.

c. is too difficult to use for many companies.

d. is based on estimates.

Q4. 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.

a. true

b. false

Q5. Calculate the cost of ending inventory using FIFO inventory cost method.

1/1

Beginning inventory

10 units @ $10 per unit

2/28

Purchases

40 units @ $12 per unit

5/10

Purchases

50 units @ $14 per unit

9/20

Purchases

30 units @ $16 per unit

12/31

Ending inventory

50 units

 

 

 

 

a. $800

b. $760

c. $580

d. $500

Q6. The inventory data for an item for November are:

Nov. 1

Inventory

25 units at $20

Nov. 10

Purchased

30 units at $21

Nov. 30

Purchased

10 units at $22

Nov. 30

Sold

35 units

 

Using the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?

a. $640

b. $605

c. $623

d. $660

Q7. Under which method of inventory cost flows is the cost flow assumed to be in the reverse order in which the expenditures were made?

a. Average cost

b. Last-in, first-out

c. First-in, first-out

d. Last-in, last-out

Q8. The maturity value of a 12%, 60-day note for $5,000 is $5,100.

a. true

b. false

Q9. The person who is to be paid when a note matures is called the payee.

a. true

b. false

Q10. If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is

a. average cost.

b. LIFO.

c. FIFO.

d. All methods will generate the same net income

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Accounting 1 Month Ago
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