Question 1

The process of a company selling its accounts receivable to another company is referred as:

Accepted Answer

A)  discounting.
B)  adjusting.
C)  assignment.
D)  factoring.E) A) and B)
F) A) and C)

Question 2

Use the following data to calculate the cost of ending inventory under average cost method.

Accepted Answer

A)  $992
B)  $400
C)  $875
D)  $700E) C) and D)
F) A) and D)

Question 3

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

Accepted Answer

A)  $600
B)  $660
C)  $640
D)  $700E) None of the above
F) B) and C)

Question 4

The inventory costing method that considers the ending inventory to be composed of units of the merchandise acquired earliest is called:

Accepted Answer

A)  first-in,first-out.
B)  highest-in,first-out.
C)  lowest-in,first-out.
D)  last-in,first-out.E) A) and B)
F) B) and D)

Question 5

Beginning inventory,purchases and sales data for the month are as follows:

Accepted Answer

(a)FIFO: $648
(b)LI...

Question 6

Beginning inventory,purchases,and sales for Product XCX are as follows:

Accepted Answer

(a)Cost of merchandise sold: 2...

Question 7

The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the order in which they were incurred.

Accepted Answer

A) True 
 B)False

Question 8

After the accounts are adjusted 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 receivables?

Accepted Answer

A)  $30,000
B)  $460,000
C)  $430,000
D)  $400,000E) A) and D)
F) A) and C)

Question 9

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Compute the adjusted balance in the allowance for doubtful accounts?

Accepted Answer

A)  $15,000
B)  $14,500
C)  $14,000
D)  $15,500E) None of the above
F) All of the above

Question 10

If merchandise inventory is being valued at cost and the price level is consistently rising,which method of costing will yield the highest inventory?

Accepted Answer

A)  Average cost
B)  LIFO
C)  FIFO
D)  All methods will generate the same gross profit.E) B) and D)
F) B) and C)

Question 11

The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  Average cost
B)  Last-in,first-out
C)  First-in,first-out
D)  Specific identification methodE) B) and C)
F) None of the above

Question 13

The inventory costing method that assigns the most recent costs to cost of good sold is:

Accepted Answer

A)  FIFO.
B)  LIFO.
C)  average cost.
D)  specific identification.E) B) and C)
F) B) and D)

Question 14

The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Accepted Answer

A) True 
 B)False

Question 15

A note receivable due in five years is listed on the balance sheet under the caption:

Accepted Answer

A)  investments.
B)  current assets.
C)  fixed assets.
D)  stockholders' equity.E) All of the above
F) C) and D)

Question 16

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

Accepted Answer

A)  understates accounts receivable on the balance sheet.
B)  violates the matching principle.
C)  adjusts allowance account the end of the year.
D)  is based on estimates.E) A) and D)
F) C) and D)

Question 17

When companies sell their receivables to other companies,the transaction is called factoring.

Accepted Answer

A) True 
 B)False

Question 18

Receivables are usually a significant portion of:

Accepted Answer

A)  total current liabilities.
B)  total sales.
C)  total current assets.
D)  total stockholders' equity.E) A) and D)
F) A) and B)

Question 19

Inventory refers to the:

Accepted Answer

A)  merchandise held for sale in the normal course of business.
B)  materials sold during the year.
C)  fixed assets purchased to assist the production process.
D)  claims arising from the purchase of raw material.E) A) and D)
F) C) and D)

Question 20

The due date of a 60-day note dated July 10 is September 9.

Accepted Answer

A) True 
 B)False

Exam 6: Receivables and Inventories

The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the order in which they were incurred.

Correct AnswerverifiedShow Answer

A note receivable due in five years is listed on the balance sheet under the caption:

Correct AnswerverifiedShow Answer

Beginning inventory,purchases and sales data for the month are as follows:

Correct Answerverified(a)FIFO: $648 (b)LI...View AnswerShow Answer

The process of a company selling its accounts receivable to another company is referred as:

Correct AnswerverifiedShow Answer

Receivables are usually a significant portion of:

Correct AnswerverifiedShow Answer

When companies sell their receivables to other companies,the transaction is called factoring.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Inventory refers to the:

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If merchandise inventory is being valued at cost and the price level is consistently rising,which method of costing will yield the highest inventory?

Correct AnswerverifiedShow Answer

The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

Correct AnswerverifiedShow Answer

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year,and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000.Compute the adjusted balance in the allowance for doubtful accounts?

Correct AnswerverifiedShow Answer

After the accounts are adjusted 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 receivables?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The inventory costing method that considers the ending inventory to be composed of units of the merchandise acquired earliest is called:

Correct AnswerverifiedShow Answer

The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Correct AnswerverifiedShow Answer

Beginning inventory,purchases,and sales for Product XCX are as follows:

Correct Answerverified(a)Cost of merchandise sold: 2...View AnswerShow Answer

The inventory costing method that assigns the most recent costs to cost of good sold is:

Correct AnswerverifiedShow Answer

Use the following data to calculate the cost of ending inventory under average cost method.

Correct AnswerverifiedShow Answer

The due date of a 60-day note dated July 10 is September 9.

Correct AnswerverifiedShow Answer

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(a)FIFO: $648
(b)LI...
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(a)Cost of merchandise sold: 2...
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