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Exam 6: Receivables and Inventories

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Question 31

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Average cost is a method of inventory valuation.

A) True
B) False

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Question 32

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Receivables not expected to be collected within one year are reported in the fixed assets section of the balance sheet.

A) True
B) False

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Question 33

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Generally accepted accounting principles do not normally allow the use of the allowance method of accounting for uncollectible accounts.

The units of Product YY2 available for sale during the year were as follows: There are 15 units of the product in the physical inventory at March 31. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

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

If merchandise inventory is being valued at cost and the price level is steadily rising,the method of costing that will yield the highest net income is:

Merchandise inventory is reported on the balance sheet in the section entitled:

The two most widely used methods for determining the cost of inventory are:

If the cost of an item of inventory is $60 and the current replacement cost is $65,the amount included in inventory according to the lower-of-cost-or market method is:

The due date of a 90-day note dated July 15 is October 13.(Assume 360 days in a year)

The difference between the total receivables and the balance in Allowance for Doubtful Accounts at the end of a period is referred to as the net realizable value of the receivables.

A 60-day,12% note for $15,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year) :

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases: (a) Balance of $3,000 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $25,000. (b) Balance of $500 in the allowance account just prior to adjustment. Uncollectibles are estimated at 2% of sales, which totaled $800,000 for the year.

The two methods of accounting for uncollectible receivables are the:

Under the direct write-off method,an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.

In valuing damaged merchandise for inventory purposes,net realizable value is the estimated selling price less any direct cost of disposal.

Credit purchase is taken into account while calculating accounts receivable turnover ratio.

The presentation of net accounts receivable on the balance sheet will be most accurate under the:

A 90-day,8% note for $10,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year) :

If sales is $1,000,000,cost of merchandise sold is $750,000,and average inventory is $220,000,how much would be inventory turnover?