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1.
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In which account are post-dated checks received classified?
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  Receivables.
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Prepaid expenses.
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Cash.
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Payables.
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2.
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Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account
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increases the allowance for uncollectible accounts.
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has no effect on the allowance for uncollectible accounts.
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has no effect on net income.
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decreases net income.
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3.
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Which of the following methods of determining annual bad debt expense best achieves the matching concept?
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Percentage of sales
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Percentage of ending accounts receivable
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Percentage of average accounts receivable
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Direct write-off
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4.
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Which of the following methods of determining bad debt expense does not properly match expense and revenue?
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Charging bad debts with a percentage of sales under the allowance method.
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Charging bad debts with an amount derived from a percentage of accounts receivable under the allowance method.
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Charging bad debts with an amount derived from aging accounts receivable under the allowance method.
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Charging bad debts as accounts are written off as uncollectible.
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5.
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Which of the following is a method to generate cash from accounts receivable?
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Assignment, but not Factoring
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Assignment and Factoring
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Factoring, but not assignment
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Neither assignment nor factoring
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6.
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Which of the following is true when accounts receivable are factored without recourse?
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The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction.
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The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables.
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The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.
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The financing cost (interest expense) should be recognized ratably over the collection period of the receivables.
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7.
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Which one of the following is NOT true as to footnote disclosure for accounts receivable?
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Receivables arising from major sources such as trade, officers, and employees.
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Year-end receivable balance and amounts received by the transferor during the period.
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Only receivables that have been billed.
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Loss contingencies on receivables.
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8.
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Footnote disclosure for notes receivable does NOT include
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The amount of notes receivable discounted.
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Description of the notes,
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Face amount of the notes.
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Market rate on the notes.
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9.
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How should the following costs affect a retailer's inventory valuation?
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Increase from Freight-in costs, No effect from Interest on Inventory Loan costs
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Increase from Freight-in costs, Increase from Interest on Inventory Loan costs
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No effect from Freight-in costs, Increase from Interest on Inventory Loan costs
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No effect from Freight-in costs, No effect from Interest on Inventory Loan costs
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10.
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Morgan Manufacturing Company has the following account balances at year end: Office supplies = $4,000, Raw materials = $27,000, Work-in-process = $59,000, Finished goods = $72,000, Prepaid insurance = $6,000. What amount should Morgan report as inventories in its balance sheet?
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$72,000.00
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$76,000.00
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$158,000.00
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$162,000.00
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11.
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Goods on consignment are
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Included in the consignee's inventory.
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Recorded in a consignment out account which is an inventory account.
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Recorded in a consignment in account which is an inventory account.
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All of these
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12.
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Which of the following is true about lower-of-cost-or-market?
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It is inconsistent because losses are recognized but not gains.
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It usually understates assets.
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It can increase future income.
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All of these.
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13.
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When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"?
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Net realizable value
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Net realizable value less a normal profit margin
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Current replacement cost
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Discounted present value
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14.
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In no case can "market" in the lower-of-cost-or-market rule be more than
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Estimated selling price in the ordinary course of business.
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Estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.
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Estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.
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Estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.
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15.
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Lower-of-cost-or-market
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Is most conservative if applied to the total inventory.
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Is most conservative if applied to major categories of inventory.
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Is most conservative if applied to individual items of inventory.
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Must be applied to major categories for taxes.
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16.
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The retail inventory method is based on the assumption that the
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Final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
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Ratio of gross margin to sales is approximately the same each period.
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Ratio of cost to retail changes at a constant rate.
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Proportions of markups and markdowns to selling price are the same.
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17.
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Muckenthaler Company sells product UCB for $20 per unit. The cost of one unit of UCB is $18, and the replacement cost is $17. The estimated cost to dispose of a unit is $4, and the normal profit is 40%. At what amount per unit should product UCB be reported, applying lower-of-cost-or-market?
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$8.00
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$16.00
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$17.00
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$18.00
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18.
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How might a company obtain a price index in order to apply dollar-value LIFO?
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Calculate an index based on recent inventory purchases.
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Use a general price level index published by the government.
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Use a price index prepared by an industry group.
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All of the above.
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19.
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Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $250,000. Assuming the current inventory at end of year prices equals $345,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO?
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$345,000.00
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$320,000.00
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$313,636.00
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$379,500.00
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20.
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Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows: Dec 31, 2X10, Inventory at end-of-year prices = $65,000 (price index = 1.00); Dec 31, 2X11, Inventory at end-of-year prices = $126,000 (price index = 1.05); Dec 31, 2X12, Inventory at end-of-year prices = $135,000 (price index = 1.10). What is the 2X10 inventory balance using dollar-value LIFO?
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$65,000.00
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$61,904.00
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$122,727.00
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$135,000.00
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21.
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Which of the following is not a common disclosure for inventories?
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Inventory composition.
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Inventory location.
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Inventory financing arrangements.
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Inventory costing methods employed.
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22.
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For the composite method, the composite
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Rate is the total cost divided by the total annual depreciation.
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Rate is the total annual depreciation divided by the total depreciable cost.
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Life is the total cost divided by the total annual depreciation.
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Life is the total depreciable cost divided by the total annual depreciation.
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23.
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Assets that qualify for interest cost capitalization include
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Assets under construction for a company's own use.
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Assets in use or ready for use.
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Assets manufactured in large quantity or on a continual basis.
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Assets not in use and not being prepared for use.
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24.
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When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
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The total interest cost actually incurred.
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A cost of capital charge for stockholders' equity.
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That portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made.
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That portion of average accumulated expenditures on which no interest cost was incurred.
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25.
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The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at
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The fair value of the asset given up, and a gain or loss is recognized.
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The fair value of the asset given up, and a gain but not a loss may be recognized.
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The fair value of the asset received if it is equally reliable as the fair value of the asset given up.
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Either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.
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26.
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Which of the following statements about involuntary conversions is false?
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An involuntary conversion may result from condemnation or fire.
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The gain or loss from an involuntary conversion may be reported as an extraordinary item.
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The gain or loss from an involuntary conversion should not be recognized when the enterprise reinvests in replacement assets.
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All of these.
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27.
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Which of the following disclosures is not required in the financial statements regarding fixed assets?
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Fixed assets held to be disposed of and any anticipated losses.
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Details demonstrating how depreciation was calculated.
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A description of depreciation method and estimates used.
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Balances of major classes of fixed assets, by nature and function.
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28.
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The most common method of recording depletion for accounting purposes is the
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Percentage depletion method.
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Decreasing charge method.
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Straight-line method.
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Units-of-production method.
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29.
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Which of the following statements is NOT true about intangibles?
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Intangible assets have a life of one year or more and lack physical substance (e.g., goodwill) or reflect a right granted by the government (e.g., trademarks, copyrights) or by another company (e.g., license fee, franchise).
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Intangibles must be internally generated.
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Intangibles generally have a high degree of uncertainty concerning future benefits.
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Intangibles should be recorded at cost.
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30.
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Disclosure regarding recognized intangibles should be made of the following EXCEPT:
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Weighted-average period at acquisition or renewal before the next renewal or extension.
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Accounting policy for costs incurred to renew or extend an intangible asset's term.
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Anticipated cash flows expected of an intangible.
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In the event renewal or extension costs are capitalized, the total cost incurred to renew or extend the term of a recognized intangible asset.
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31.
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Companies should test goodwill at least annually for:
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Recoverability.
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Amortization.
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Impairment.
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Estimated useful life.
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