Question 1. Your healthcare organization recently purchased some office equipment on account. The proper entry would involve a
- debit to Office Expense and credit to Accounts Payable. (No. The proper entry would be a debit to Office Equipment and a credit to Accounts Payable.)
- debit to Office Equipment and credit to Accounts Payable. (Yes. The proper entry would be a debit to Office Equipment and a credit to Accounts Payable.)
- debit to Office Equipment and credit to Accounts Receivable.(No. The proper entry would be a debit to Office Equipment and a credit to Accounts Payable.)
- debit to Accounts Payable and credit to Office Equipment. (No. The proper entry would be a debit to Office Equipment and a credit to Accounts Payable.)
Question 2.The income statement and balance sheet approaches are used to estimate uncollectible accounts. Which of the following comments applies to both of these approaches?
- The aging process is often used to obtain proper valuation amounts. (Yes. The aging process is often used to obtain proper valuation amounts.)
- Generally speaking, matching is improved when compared with the direct write-off method. (No. The aging process is often used to obtain proper valuation amounts.)
- The focus is on the net realizable value of accounts receivable.(No. The aging process is often used to obtain proper valuation amounts.)
- Total credit sales is commonly used as the estimation base. (No. The aging process is often used to obtain proper valuation amounts.)
Question 3.Kaplan's Medical Clinic uses the allowance method of accounting for bad debts. The company recently wrote off the $135 balance of Karen Sorrell as uncollectible. As a result of the write-off, Kaplan's Medical Clinic will experience
- a $135 decline in income. (No. Kaplan would experience a $135 decline in the net realizable value of Accounts Receivable.)
- a $135 decline in the net realizable value of Accounts Receivable.(Yes. Kaplan would experience a $135 decline in the net realizable value of Accounts Receivable.)
- a $135 increase in the Allowance for Uncollectible Accounts. (No. Kaplan would experience a $135 decline in the net realizable value of Accounts Receivable.)
- no change in total assets. (No. Kaplan would experience a $135 decline in the net realizable value of Accounts Receivable.)
Question 4.The inventory cost flow assumption in which the oldest costs incurred become part of cost of goods sold when units are sold is
- LIFO. (NO. First in First Out (FIFO) is the inventory cost flow assumption in which the oldest costs incurred become part of cost of goods sold when units are sold)
- FIFO. (YES. First in First Out (FIFO) is the inventory cost flow assumption in which the oldest costs incurred become part of cost of goods sold when units are sold)
- the weighted average. (NO. First in First Out (FIFO) is the inventory cost flow assumption in which the oldest costs incurred become part of cost of goods sold when units are sold)
- retail. (NO. First in First Out (FIFO) is the inventory cost flow assumption in which the oldest costs incurred become part of cost of goods sold when units are sold)
Question 5.Depreciation is
- a system of cost allocation, not valuation. (Yes. Depreciation is a system of cost allocation, not valuation.)
- a system of valuation. (No. Depreciation is a system of cost allocation, not valuation.)
- recorded in an effort to reduce assets to their fair market value.(No. Depreciation is a system of cost allocation, not valuation.)
- based on an asset's cost and residual value but not service life.(No. Depreciation is a system of cost allocation, not valuation.)