1.(TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to record the estimated bad debts: increases total assets.reduces net income.has no effect on total assets or net income.increases net income and decreases total assets. 2.(TCO 6) Net accounts receivable is calculated as: sales less sales returns and allowances.accounts receivable plus allowance for uncollectible accounts.accounts receivable less allowance for uncollectible accounts.accounts payable plus allowance for uncollectible accounts. 3.(TCO 7) If a company is using a perpetual inventory system, the balance in its inventory account three-quarters of the way through an accounting period would be equal to: the total of the beginning inventory plus goods purchased during the accounting periodthe amount of goods purchased during the periodthe inventory on hand at the beginning of the periodthe inventory on hand at the beginning of the period plus goods purchased during the accounting period minus goods sold during the period 4.(TCO 7) When the LIFO method is used, cost of goods sold is assumed to consist of: units with the lowest per unit cost.oldest units.units with the highest per unit cost.most recently purchased units. 5.(TCO 8) On January 3, 2010, ZB Corporation acquired equipment for $180,000. The estimated life of the equipment is 5 years. The estimated residual value is $30,000. What is the book value of the asset on December 31, 2011, if ZB Corporation uses the straight-line method of depreciation $150,000$130,000$120,000$90,000 6.(TCO 8) At the end of an asset s useful life, the balance in Accumulated Depreciation will be the same as: depreciable cost.book value.salvage value.total depreciation expense. 7.(TCO 9) Current liabilities fall into two categories which are referred to as: unearned liabilities and payable liabilitiesliabilities of a known amount and estimated liabilitiescontra-liabilities and contingent liabilitiescontingent liabilities and non-contingent liabilities 8.(TCO 9) Monthly sales were $200,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale the company should record a debit to: Sales for $8,000Warranty Expense for $8,000Warranty Payable for $8,000No entry is required since the actual liability amount is not known

1.(TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to record the estimated bad debts: increases total assets.reduces net income.has no effect on total assets or net income.increases net income and decreases total assets. 2.(TCO 6) Net accounts receivable is calculated as: sales less sales returns and allowances.accounts receivable plus allowance for uncollectible accounts.accounts receivable less allowance for uncollectible accounts.accounts payable plus allowance for uncollectible accounts. 3.(TCO 7) If a company is using a perpetual inventory system, the balance in its inventory account three-quarters of the way through an accounting period would be equal to: the total of the beginning inventory plus goods purchased during the accounting periodthe amount of goods purchased during the periodthe inventory on hand at the beginning of the periodthe inventory on hand at the beginning of the period plus goods purchased during the accounting period minus goods sold during the period 4.(TCO 7) When the LIFO method is used, cost of goods sold is assumed to consist of: units with the lowest per unit cost.oldest units.units with the highest per unit cost.most recently purchased units. 5.(TCO 8) On January 3, 2010, ZB Corporation acquired equipment for $180,000. The estimated life of the equipment is 5 years. The estimated residual value is $30,000. What is the book value of the asset on December 31, 2011, if ZB Corporation uses the straight-line method of depreciation $150,000$130,000$120,000$90,000 6.(TCO 8) At the end of an asset s useful life, the balance in Accumulated Depreciation will be the same as: depreciable cost.book value.salvage value.total depreciation expense. 7.(TCO 9) Current liabilities fall into two categories which are referred to as: unearned liabilities and payable liabilitiesliabilities of a known amount and estimated liabilitiescontra-liabilities and contingent liabilitiescontingent liabilities and non-contingent liabilities 8.(TCO 9) Monthly sales were $200,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale the company should record a debit to: Sales for $8,000Warranty Expense for $8,000Warranty Payable for $8,000No entry is required since the actual liability amount is not known

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1.(TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to record the estimated bad debts:

increases total assets.
reduces net income.
has no effect on total assets or net income.
increases net income and decreases total assets.

2.(TCO 6) Net accounts receivable is calculated as:

sales less sales returns and allowances.
accounts receivable plus allowance for uncollectible accounts.
accounts receivable less allowance for uncollectible accounts.
accounts payable plus allowance for uncollectible accounts.

3.(TCO 7) If a company is using a perpetual inventory system, the balance in its inventory account three-quarters of the way through an accounting period would be equal to:

the total of the beginning inventory plus goods purchased during the accounting period
the amount of goods purchased during the period
the inventory on hand at the beginning of the period
the inventory on hand at the beginning of the period plus goods purchased during the accounting period minus goods sold during the period

4.(TCO 7) When the LIFO method is used, cost of goods sold is assumed to consist of:

units with the lowest per unit cost.
oldest units.
units with the highest per unit cost.
most recently purchased units.

5.(TCO 8) On January 3, 2010, ZB Corporation acquired equipment for $180,000. The estimated life of the equipment is 5 years. The estimated residual value is $30,000. What is the book value of the asset on December 31, 2011, if ZB Corporation uses the straight-line method of depreciation

$150,000
$130,000
$120,000
$90,000

6.(TCO 8) At the end of an asset s useful life, the balance in Accumulated Depreciation will be the same as:

depreciable cost.
book value.
salvage value.
total depreciation expense.

7.(TCO 9) Current liabilities fall into two categories which are referred to as:

unearned liabilities and payable liabilities
liabilities of a known amount and estimated liabilities
contra-liabilities and contingent liabilities
contingent liabilities and non-contingent liabilities

8.(TCO 9) Monthly sales were $200,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale the company should record a debit to:

Sales for $8,000
Warranty Expense for $8,000
Warranty Payable for $8,000
No entry is required since the actual liability amount is not known

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