Exam 8: Accounting for Selected Assets

A business ended the year with a cash balance of $40 000. During the year, the following transactions took place: Assuming no other transactions took place, the cash at the beginning of the year was:

The direct write-off method for accounting for bad debts is preferred over the allowance for doubtful debts method, as the latter creates a negative or contra asset which is not considered a 'real' account under accrual accounting.

A building was purchased for $100 000 and used for four years of its estimated 10-year life. It has no residual value and the straight-line method is used. The carrying value of the building after the four years' usage would be reported on the balance sheet at:

An increase in the Allowance for Doubtful Debts will:

The So-Big Company sells hot-dogs. Inventory information for a recent week is shown below: If five units were sold during the week, what is the cost of goods sold if the LIFO periodic method is used?

Inventories do not include goods and services:

If a firm's depreciation expense doubles in a period which of the following will increase as a result of this event? Net profit Cash flow

The fundamental difference between identifiable and unidentifiable intangible assets is whether the assets are separable from the business.

Which of the following is not an identifiable intangible asset?

The cost of a block of wood is $28 but the net realisable value is $24. Under the valuation rule in accounting standards, the block of wood is recognised at:

Schultz-Stein Company has the following inventory information for a recent year: The cost of ending inventory, using the weighted-average periodic method, is:

When a company reports depreciation expense on the statement of comprehensive income:

Products and services that are at an intermediate stage of completion form part of the work in progress.

Which of the following statements is incorrect?

Allowance for doubtful debts is:

Goods, other property and services: (a) held for sale in the ordinary course of business; (b) in the process of production for such sale; or (c) to be used up in the production of goods, other property or services for sale, including consumable stores and supplies, are all various types of inventory.

Which of the following is false concerning the lower-of-cost-or-net realisable value rule when it is applied to the valuation of inventory?

The net realisable value of inventory represents selling price less the costs involved in completing and selling the inventory.

Because goodwill is unidentifiable, it cannot be recognised as an asset.

If a firm's depreciation expense is cut by 25% in a period, which of the following will decrease as a result of this event? Net profit Cash flow