1. After the physical inventory is completed,
A) quantities are listed on inventory summary sheets.
B) quantities are entered into various general ledger inventory accounts.
C) the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets.
D) unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs.
2. The manager of Worley is given a bonus based on net income before taxes. The net income after taxes is $5,600 for FIFO and $4,900 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?
3. Jones Company had checks outstanding totaling $5,400 on its June bank reconciliation. In July, Jones Company issued checks totaling $38,900. The July bank statement shows that $26,300 in checks cleared the bank in July. A check from one of Jones Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Davis Company's July bank reconciliation should be
4. The account Allowance for Doubtful Accounts is classified as a(n)
B) contra account of Bad Debt Expense.
D) contra account to Accounts Receivable.
5. The matching principle
A) requires that all credit losses be recorded when an individual customer cannot pay.
B) necessitates the recording of an estimated amount for bad debts.
C) results in the recording of a known amount for bad debt losses.
D) is not involved in the decision of when to expense a credit loss.
6. If an account is collected after having been previously written off
A) the allowance account should be debited.
B) only the control account needs to be credited.
C) both income statement and balance sheet accounts will be affected.
D) there will be both a debit and a credit to accounts receivable.
7. Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?
8. A truck was purchased for $18,000 and it was estimated to have a $3,000 salvage value at the end of its useful life. Monthly depreciation expense of $250 was recorded using the straight-line method. The annual depreciation rate is
9. A truck that cost $12,000 and on which $10,000 of accumulated depreciation has been recorded was disposed of for $3,000 cash. The entry to record this event would include a
A) gain of $1,000.
B) loss of $1,000.
C) credit to Truck account for $3,000.
D) credit to Accumulated Depreciation for $10,000.
10. A loss on disposal of a plant asset is reported in the financial statements
A) in the Other Revenues and Gains section of the income statement.
B) in the Other Expenses and Losses section of the income statement.
C) as a direct increase to the capital account on the balance sheet.
D) as a direct decrease to the capital account on the balance sheet.