1.      When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory method is called (Points : 2)

a.       first-in, last-out.

b.      last-in, first-out.

c.       first-in, first-out.

d.      average cost.

2.      Allowance for Doubtful Accounts is listed on the balance sheet under the caption (Points : 2)

a.       stockholders' equity.

b.      investments.

c.       fixed assets.

d.      current assets.

3.      In reference to a promissory note, the person who makes the promise to pay is called the (Points : 2)

a.      maker.

b.      payee.

c.       seller.

d.      receiver.

4.      The two methods of accounting for uncollectible receivables are the allowance method and the (Points : 2)

a.       equity method.

b.      direct write-off method.

c.       interest method.

d.      cost method.

5.      Receivables are usually a significant portion of

a.       total current liabilities.

b.      total liabilities.

c.       total current assets.

d.      total assets.

6.      A note receivable due in 18 months is listed on the balance sheet under the caption

a.       long-term liabilities.

b.      fixed assets.

c.       current assets.

d.      investments.

7.      A note receivable due in five years is listed on the balance sheet under the caption (Points : 2)

a.      investments.

b.      current assets.

c.       fixed assets.

d.      stockholders' equity.

8.      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

a.      $15,300.

b.      $15,000.

c.       $14,700.

d.      $16,800.

 

9.      The due date of a 90-day note dated July 5 is (Points : 2

a.       September 30.

b.      October 2.

c.       October 3.

d.      October 1.

10.  The inventory data for an item for November are: 

Nov. 1

Inventory

25 units at $20

10

Purchased

30 units at $21

30

Purchased

10 units at $22

 

Sold

35 units

Using the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30? (Points : 2)

a.      $640

b.      $605

c.       $623

d.      $660

 

11.  What type of account is Allowance for Doubtful Accounts?

a.      Contra asset

b.      Asset

c.       Revenue

d.      Expense

12.  The presentation of net accounts receivable on the balance sheet will be most accurate under the (Points : 2)

a.       direct write-off method.

b.      estimate based on the percentage of sales method.

c.       estimate based on analysis of receivables.

d.      none of these.

13.  The inventory method that assigns the most recent costs to cost of goods sold is

a.       FIFO.

b.      LIFO.

c.       average cost.

d.      specific identification.

14.  The amount of the promissory note plus the interest earned on the due date is called the (Points : 2

a.       realizable value.

b.      maturity value.

c.       face value.

d.      net realizable value

15.  Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

a.       at the end of each accounting period.

b.      when a credit sale is past due.

c.       whenever a pre-determined amount of credit sales have been made.

d.      when an account is determined to be worthless.

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