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ACCY 200

CQ2

QuestionAnswer
#1: The current assets of most companies are usually made up of: • cash and assets expected to be converted to cash within a year.
#3) When a manufacturer invests in short-term marketable securities: • risk avoidance is of great importance.
4: A cash equivalent is a current asset that: • is readily convertible into cash with a minimal risk.
5: The accrual of interest on short-term marketable securities results in: • an increase in current assets and an increase in net income.
6: The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is: • matching revenue and expense.
#7: The allowance for uncollectible accounts is a(n): • contra current asset.
debt expense is recognized in the same accounting period as the revenue that is related to the receivable because: • all costs incurred in the current period should be subtracted from current period revenues.
#9) When an uncollectible account receivable is written off against the allowance for bad debts: • total current assets are not affected.
10) With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require: • the write-off be approved by two employees.
11) An organization's system of internal control is designed primarily to: • provide an operating framework for all employees as they work to achieve the organization's goals.
#12) When a firm uses the LIFO inventory cost flow assumption: • better matching of revenue and expense is achieved than under FIFO.
#14) An accounts receivable results from the sale of: • goods and services to customers on account
The inventory cost flow assumption describes the flow of product cost: • into the asset (inventory) account and out to the expense (cost of goods sold) account.
: One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if: • the cost of inventory items changes during the year.
#17: When costs are rising over time: • FIFO results in higher profits than LIFO.
#18: In an inflationary economic environment, the selling price set for a firm's products will: • not be affected by the cost flow assumption used.
The balance sheet valuation of inventories is: • lower of cost or market.
Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments? • Perpetual.
#22) The effect of an error resulting in an understatement of ending inventory is to: • overstate cost of goods sold of the current period.
#24) Regardless of the inventory cost flow assumption used, inventories on the balance sheet are stated at: • the lower of cost or market.
#13) Accounts receivable are reported at: • net realizable value.
#16) One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if: • the cost of inventory items changes during the year.
#27) Which of the following is NOT an example of an inventory account a manufacturing firm might use? • Merchandise inventory
Which of the following is the correct balance sheet presentation for current assets? • Accounts receivable, inventories, prepaid expenses, other current assets.
One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that: • income taxes will be lower.
Which of the following is true regarding notes receivables? • A note is a more formal document than an account receivable.
The balance sheet presentation of accounts receivable net of the allowance for doubtful accounts has the effect of stating accounts receivable at: • net realizable value.
Created by: boston23
 

 



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