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(TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to
record the estimated bad debts: (Points : 6)
increases total assets.
reduces net income.
has no effect on total assets or net income.
increases net income and decreases total assets.
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: (Points :
6)
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: (Points : 6)
units with the lowest per unit cost.
oldest units.
units with the highest per unit cost.
most recently purchased units.
6. (TCO 8) At the end of an asset’s useful life, the balance in Accumulated Depreciation will
be the same as: (Points : 6)
depreciable cost.
book value.
salvage value.
total depreciation expense.
7. (TCO 9) Current liabilities fall into two categories which are referred to as: (Points : 6)
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: (Points : 6)
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.
9. (TCO 10) The employer sends the master copy of the W-2 form to: (Points : 6)
Internal Revenue Service
Federal Reserve Bank
Social Security Administration
Treasurer of the United States