Question 1
Under the allowance method, Bad Debt Expense is recorded
A. as an estimate.
B. when an individual account is written off.
C. several times during the year as needed.
D. None of the above
Question 2
Which amount does not change during the period and is added to purchases when computing the cost of goods available for sale?
A. Beginning inventory
B. Ending inventory
C. Periodic inventory
D. Freight-in
Question 3
Which method uses an aging of Accounts Receivable to calculate the Bad-Debts Expense?
A. Income statement approach
B. Balance sheet approach
C. Aging the Accounts Receivable
D. Direct write-off
Question 4
The ending Merchandise Inventory account appears in the _______ on the worksheet.
A. adjusted trial balance and balance sheet columns
B. adjustment column
C. adjustment, adjusted trial balance, and income statement columns
D. adjustment, adjusted trial balance, and balance sheet column
Question 5
When using a periodic inventory method, which account is increased when you buy merchandise inventory?
A. Cost of Goods Sold
B. Beginning Inventory
C. Ending Inventory
D. Purchases
Question 6
Which of these is true about the normal balance of an income summary?
A. The balance is debit.
B. The balance is credit.
C. The account doesn't have a normal balance.
D. It depends on which financial statement it appears.
Question 7
Net realizable value can be defined as the
A. Gross Accounts Receivable.
B. Current Bad Debts Expense.
C. amount of Accounts Receivable you don't expect to collect.
D. Gross Accounts Receivable minus the Allowance for Doubtful Accounts.
Question 8
The beginning Merchandise Inventory account appears in the _______ on the worksheet.
A. adjustment column
B. trial balance and the balance sheet columns
C. trial balance and adjustment columns
D. All of the above
Question 9
Indy Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad-Debts Expense includes a
A. credit to the Bad-Debt Expense account for $500.
B. debit to the Bad-Debts Expense account for $900.
C. credit to the Bad-Debts Expense account for $1,300.
D. debit to the Bad-Debts Expense account for $500.
Question 10
Cost of goods sold equals
A. beginning inventory + net purchases + freight-in + ending inventory.
B. beginning inventory - net purchases - freight-in + ending inventory.
C. beginning inventory + net purchases + freight-in - ending inventory.
D. beginning inventory - net purchases + freight-in + ending inventory.
Question 11
Which inventory appears in the balance sheet column of the worksheet?
A. Ending inventory
B. Beginning inventory
C. Combination of beginning and ending inventories
D. None of the above
Question 12
Beginning and ending inventories for Webster's Books are $9,000 and $6,000, respectively. The debit amounts (not including Income Summary) in the income statement columns of the worksheet total $14,000, and the credit amounts (not including Income Summary) total $15,500. The firm has a
A. net income of $1,500.
B. net loss of $1,500.
C. net loss of $3,000.
D. net income of $3,000.
Question 13
At the start of the year, Northern Lights had $8,000 worth of merchandise. What do we know about Northern Lights?
A. It's a service business.
B. It's a retail business.
C. The company ended with a net income last year.
D. The company ended with a net loss last year.
Question 14
Which type of account is an Allowance for Doubtful Accounts?
A. Asset
B. Contra-asset
C. Revenue
D. Contra-revenue
Question 15
Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 credit before adjustment, what is the Bad-Debts Expense adjustment for the period?
A. $3,000
B. $600
C. $2,400
D. $3,600
Question 16
Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible. Barber calculates Bad-Debts Expense using the
A. income statement approach.
B. direct write-off method.
C. balance sheet approach.
D. aging the Accounts Receivable approach.
Question 17
On December 31, 2012, Brooke's Horse Stable's unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad-Debts Expense includes a
A. debit to the Allowance account for $568.
B. credit to the Allowance account for $42.
C. debit to the Allowance account for $822.
D. credit to the Allowance account for $1,432.
Question 18
An account never used in a service business is
A. Consulting Fees-Revenue.
B. Interest Payable.
C. Merchandise Inventory.
D. Accumulated Depreciation-Equipment.
Question 19
Fit City estimates it will collect $2,300 of the $2,425 owed by customers. The difference of $125 represents the
A. Gross Accounts Receivable.
B. Allowance for Doubtful Accounts.
C. Net Realizable Value.
D. Value of the Current Unpaid Receivables.
Question 20
Beginning merchandise inventory would be found on the worksheet in the
A. income statement debit column.
B. income statement credit column.
C. balance sheet debit column.
D. balance sheet credit column.