Question 1

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

Accepted Answer

A) It is reported on the balance sheet as a component of current assets. 
B) It is a contra-asset account. 
C) It is reported on the balance sheet as a current liability. 
D) It is created as a result of the adjusting entry to record bad debt expense. 
A) It is reported on the balance sheet as a component of current assets. 
B) It is a contra-asset account. 
C) It is reported on the balance sheet as a current liability. 
D) It is created as a result of the adjusting entry to record bad debt expense.

Question 2

Which of the following is the most likely cause of a decrease in a company's gross profit percentage?

Accepted Answer

A) The selling price decreased. 
B) The product cost as a percentage of sales decreased. 
C) The operating expenses increased. 
D) Fewer products were sold. 
A) The selling price decreased. 
B) The product cost as a percentage of sales decreased. 
C) The operating expenses increased. 
D) Fewer products were sold.

Question 3

The CHS Company has provided the following information:
Accounts receivable written-off as uncollectible during the year amounted to $11,500.
The accounts receivable balance at the beginning of the year was $150,000.
The accounts receivable balance at the end of the year was $210,000.
 The allowance for doubtful accounts balance at the beginning of the year was $14,000.
 The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900.
 Credit sales during the year totaled $900,000.
How much was CHS Company's bad debt expense?

Accepted Answer

A) $11,500 
B) $12,900 
C) $10,400 
D) $14,000 
A) $11,500 
B) $12,900 
C) $10,400 
D) $14,000

Question 4

A portion of the income statement for Lone Star Company is shown below.Provide the missing account titles and amounts. $\begin{array}{ll}
A.&---- & \$ 380,000 \
&\text { Sales discounts } & 20,000 \
&\text { Net sales}&&B.&----\
&\text { Cost of goods sold}&&&\$100,000\
C.&---- &&D.&----\
\end{array}$

Accepted Answer

The answer of A portion of the income statement for...

Question 5

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end; this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the allowance for doubtful accounts balance.

Accepted Answer

A) True 
 B)False

Question 6

Sales discounts are deducted from sales in the calculation of net sales.

Accepted Answer

A) True 
 B)False

Question 7

Redwing Company sold inventory costing $500 to a customer on account for $700.Which of the following does not correctly describe the collection of $686 cash when the customer takes advantage of a discount?

Accepted Answer

A) Gross profit decreases $14. 
B) Accounts receivable decreases $700. 
C) Current assets decrease $14. 
D) Operating income is not affected. 
A) Gross profit decreases $14. 
B) Accounts receivable decreases $700. 
C) Current assets decrease $14. 
D) Operating income is not affected.

Question 8

Which of the following correctly describes the following journal entry? Cash
Sales discounts
$ \quad $$ \quad $Accounts receivable

Accepted Answer

A) The gross profit percentage remains the same. 
B) Operating income decreases. 
C) Current assets increase. 
D) Net sales increases. 
A) The gross profit percentage remains the same. 
B) Operating income decreases. 
C) Current assets increase. 
D) Net sales increases.

Question 9

Woodland Company uses the allowance method to account for bad debts.During 2009,a customer became bankrupt and a receivable of $10,000 was deemed uncollectible.Which of the following journal entries records the uncollectible account write-off?

Accepted Answer

A)  Allowance for doubtful accounts $ \quad $ $ \quad $$10.000$
$ \quad $Accounts receivable $ \quad $  $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$10.000$ 
B)  Bad debt expense$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $10,000
$ \quad $Allowance for doubtful accounts$ \quad $$ \quad $$ \quad $$ \quad $10,000 
C)  Allowance for doubtful accounts$ \quad $$ \quad $$ \quad $10,000
Bad debt expense$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $10,000 
D)  Loss on receivables$ \quad $$ \quad $$ \quad $10,000
$ \quad $Accounts receivables$ \quad $$ \quad $$ \quad $$ \quad $10.000 
A)  Allowance for doubtful accounts $ \quad $ $ \quad $$10.000$
$ \quad $Accounts receivable $ \quad $  $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$10.000$ 
B)  Bad debt expense$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $10,000
$ \quad $Allowance for doubtful accounts$ \quad $$ \quad $$ \quad $$ \quad $10,000 
C)  Allowance for doubtful accounts$ \quad $$ \quad $$ \quad $10,000
Bad debt expense$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $10,000 
D)  Loss on receivables$ \quad $$ \quad $$ \quad $10,000
$ \quad $Accounts receivables$ \quad $$ \quad $$ \quad $$ \quad $10.000

Question 10

A comparison of the balance in Cottonwood Company's cash account (per its books)as of April 30,2009,and the bank statement dated April 30,2009,revealed the following information:
 $$\begin{array} { l l r } 
\text { Code } & \text { Item } & \
\text { A. } & \text { Ending Cash account balance per books (unadjusted) } & \$ 5,520 \
\text { B. } & \text { Ending balance per bank statement } & 5,170 \
\text { C. } & \text { Customer's NSF check returned by bank } &  \
& \text { Shown on the April bank statement } & 300 \

\text { D. } & \text { Outstanding checks at the end of April } & 870 \
\text { E. } & \text { Deposit in transit at the end of April } & 1,100\
\text { F. } & \text { Error made by Cottonwood in recording a check paid to a supplier } & \
& \text { during April- } \$ 550 \text { was credited to Cash account when the proper } & \
&\text { amount was } \$ 500 \text {; the bank properly recorded the check } \$ 500&50\
&\text { when it cleared }\
\text { G. } & \text { Bank service charge for  } & 20 \
\text { H. } & \text { April Interest paid by bank} & 150\
\end{array}$$ Required:
Prepare a bank reconciliation using the format below.Indicate the proper handling of each of the items given above by listing the appropriate item code (letter)and amount under each section of the reconciliation statement form below.Then determine the correct cash balance.
Note:
 If one or more of the items given above should not appear on the reconciliation statement,do not include the item(s).

Accepted Answer

The answer of A comparison of the balance in Cottonwood...

Question 11

Prior year financial statements are adjusted when it is determined that prior year bad debt expense was too low.

Accepted Answer

A) True 
 B)False

Question 12

The Ward Company has provided the following information:
Net sales totaled $750,000.
Beginning net accounts receivable was $65,000.
Ending net accounts receivable was $85,000.
What was Ward's average collection period?

Accepted Answer

A) 73 days 
B) 41.8 days 
C) 31.6 days 
D) 36.5 days 
A) 73 days 
B) 41.8 days 
C) 31.6 days 
D) 36.5 days

Question 13

Sales returns and allowances is a contra-revenue account.

Accepted Answer

A) True 
 B)False

Question 14

Linetech Company's bank statement showed an ending balance of $8,000.Items appearing in the bank reconciliation included:
Outstanding checks,$500; deposits in transit,$1,000; bank service charges,$50; and Driver Company's $250 check erroneously deducted from Linetech's bank account by the bank.How much is the correct cash balance at the end of the month?

Accepted Answer

A) $10,600 
B) $8,750 
C) $8,500 
D) $8,250 
A) $10,600 
B) $8,750 
C) $8,500 
D) $8,250

Question 15

A portion of the income statement for Oscar Company is shown below.Provide the missing account titles and amounts. $$
\begin{array}{ll}
A.&-----&&\$ 350,000 & \
&\text { Sales returns and allowances }&B.&-----&  \
C.& -----&&& \$ 348,000 \
D.&-----&&& ----- \
& \text { Gross profit } &&& \$ 90,000
\end{array}
$$

Accepted Answer

The answer of A portion of the income statement for...

Question 16

Which of the following statements is correct?

Accepted Answer

A) A decrease in the accounts receivable balance means that credit sales exceeded cash collections from customers. 
B) The accounts receivable balance increases when cash collected from customers exceeds credit sales. 
C) A decrease in accounts receivable is deducted from net income when determining cash flow from operations. 
D) An increase in accounts receivable is deducted from net income when determining cash flow from operations. 
A) A decrease in the accounts receivable balance means that credit sales exceeded cash collections from customers. 
B) The accounts receivable balance increases when cash collected from customers exceeds credit sales. 
C) A decrease in accounts receivable is deducted from net income when determining cash flow from operations. 
D) An increase in accounts receivable is deducted from net income when determining cash flow from operations.

Question 17

On June 1,2010,Concorde Company sold merchandise on credit at an invoice price of $1,000; terms 2/10,n/30.Give the journal entries to record the following:
A.To record the sale.
B.Assumption A: To record collection on June 28, 2010.
C.Assumption B: To record collection on June 9, 2010.

Accepted Answer

The answer of On June 1,2010,Concorde Company sold merchandise on...

Question 18

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Accepted Answer

A) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period. 
B) Cash is debited for $10,000, accounts receivable is credited for $9,800 and sales discounts is credited for $200 if the collection is within the discount period. 
C) Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is after the discount period. 
D) Cash is debited for $10,000, accounts receivable is credited for $10,000 if the collection is after the discount period. 
A) Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period. 
B) Cash is debited for $10,000, accounts receivable is credited for $9,800 and sales discounts is credited for $200 if the collection is within the discount period. 
C) Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is after the discount period. 
D) Cash is debited for $10,000, accounts receivable is credited for $10,000 if the collection is after the discount period.

Question 19

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

Accepted Answer

The answer of Why is the reconciliation of a company's...

Question 20

Dillon Company uses the allowance method to account for bad debts.The entry to write-off a bad account (one that will never be collected)should be: $\begin{array}{l l c}
& \text { Debit } & \text { Credit }\
\text {A. } &\text { Bad debt expense} &\text { Accounts receivable }\
\text { B. } & \text { Bad debt expense }&\text { Allowance for doubtful accounts }\
\text { C. } & \text { Sales revenue }&\text { Accounts receivable}\
\text { D. } & \text {Allowance for doubtful accounts }&\text { Accounts receivable }\
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

Which of the following is the most likely cause of a decrease in a company's gross profit percentage?

A portion of the income statement for Lone Star Company is shown below.Provide the missing account titles and amounts. A. ---- \ 380,000 Sales discounts 20,000 Net sales B. ---- Cost of goods sold \1 00,000 C. ---- D. ----

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end; this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the allowance for doubtful accounts balance.

Sales discounts are deducted from sales in the calculation of net sales.

Redwing Company sold inventory costing $500 to a customer on account for $700.Which of the following does not correctly describe the collection of $686 cash when the customer takes advantage of a discount?

Which of the following correctly describes the following journal entry? Cash Sales discounts $\quad$ $\quad$ Accounts receivable

Woodland Company uses the allowance method to account for bad debts.During 2009,a customer became bankrupt and a receivable of $10,000 was deemed uncollectible.Which of the following journal entries records the uncollectible account write-off?

Prior year financial statements are adjusted when it is determined that prior year bad debt expense was too low.

The Ward Company has provided the following information: Net sales totaled $750,000. Beginning net accounts receivable was $65,000. Ending net accounts receivable was $85,000. What was Ward's average collection period?

Sales returns and allowances is a contra-revenue account.

A portion of the income statement for Oscar Company is shown below.Provide the missing account titles and amounts. A. ----- \ 350,000 Sales returns and allowances B. ----- C. ----- \ 348,000 D. ----- ----- Gross profit \ 90,000

Which of the following statements is correct?

On June 1,2010,Concorde Company sold merchandise on credit at an invoice price of $1,000; terms 2/10,n/30.Give the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28, 2010. C.Assumption B: To record collection on June 9, 2010.

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters

Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

Which of the following statements does not correctly describe the allowance for doubtful accounts balance?

Which of the following is the most likely cause of a decrease in a company's gross profit percentage?

A portion of the income statement for Lone Star Company is shown below.Provide the missing account titles and amounts. A. ---- \ 380,000 Sales discounts 20,000 Net sales B. ---- Cost of goods sold \1 00,000 C. ---- D. ----

The accounts receivable aging schedule determines the dollar amount of uncollectible accounts receivable at year-end; this dollar amount of uncollectible accounts receivable is the bad debt expense that is recorded for the year regardless of the allowance for doubtful accounts balance.

Sales discounts are deducted from sales in the calculation of net sales.

Redwing Company sold inventory costing $500 to a customer on account for $700.Which of the following does not correctly describe the collection of $686 cash when the customer takes advantage of a discount?

Which of the following correctly describes the following journal entry? Cash Sales discounts \quad \quad Accounts receivable

Woodland Company uses the allowance method to account for bad debts.During 2009,a customer became bankrupt and a receivable of $10,000 was deemed uncollectible.Which of the following journal entries records the uncollectible account write-off?

Prior year financial statements are adjusted when it is determined that prior year bad debt expense was too low.

The Ward Company has provided the following information: Net sales totaled $750,000. Beginning net accounts receivable was $65,000. Ending net accounts receivable was $85,000. What was Ward's average collection period?

Sales returns and allowances is a contra-revenue account.

A portion of the income statement for Oscar Company is shown below.Provide the missing account titles and amounts. A. ----- \ 350,000 Sales returns and allowances B. ----- C. ----- \ 348,000 D. ----- ----- Gross profit \ 90,000

Which of the following statements is correct?

On June 1,2010,Concorde Company sold merchandise on credit at an invoice price of $1,000; terms 2/10,n/30.Give the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28, 2010. C.Assumption B: To record collection on June 9, 2010.

Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?

Why is the reconciliation of a company's cash account to the bank statement so important for effective internal control for cash?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters

Which of the following correctly describes the following journal entry? Cash Sales discounts $\quad$ $\quad$ Accounts receivable