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24_Accounting MCQs




Question;9.;Jot Construction Company uses the percentage-of-completion method of;accounting. In 2013, Jot began work on a contract it had received which;provided for a contract price of $6,000,000. Additional information related;to the project includes: costs incurred during the year were $1,400,000;estimated costs to complete as of December 31, 2013 were $2,100,000. What;amount should Jot recognize as gross profit for the project in 2013?;$700,000 $1,000,000 $1,500,000 $2,500,000;10.;Swift Builders, Inc. uses the completed-contract method of accounting for a;$450,000 contract that it expects will take two years to complete. At;December 31, 2013, the end of the first year of the contract, additional;information related to the project includes: costs incurred to date were;$290,000, estimated costs to complete were $180,000, billings to date were;$325,000, collections to date were $300,000. What amount should Swift;recognize as gross profit or loss for 2013?;$;-0- a;$20,000 loss a;$40,000 loss a;$110,000 loss;11.;Miller Company appropriately uses the installment method of accounting to;recognize income in its financial statements. Pertinent data relating to;this method of accounting includes: installment sales totaled $400,000 for;2013 and $500,000 for 2014, cost of sales were $260,000 for 2013 and;$300,00 for 2014, in 2013 Miller collected $280,000 from 2013 sales, in;2014 Miller collected $100,000 from 2013 sales and $300,000 from 2014;sales. What amount should Miller report as realized gross profit on the;2014 income statement?;$155,000 $120,000 $98,000 $35,000;12.;In a consignment sale, the consignor (Points: 6);does;not show the merchandise as an asset on its books. recognizes;revenue only after receiving notification of sale and the cash remittance;from the consignee. recognizes;revenue when it ships merchandise to the consignee. periodically;prepares an "account report" for the consignee.;13.;If Collier Costumes, Inc. has the following items at year-end, how much;should it report as cash on the balance sheet?;Cash in bank;$25,700;Cash on hand;$620;Post-dated checks;$1,680;Certificates of deposit;$80,000;$80,000 $28,000 $26,320 $620;14.;At December 31, 2013, Vega Vacuum Corporation has cash in bank of 38,500;restricted cash in a separate account of $9,000, and a bank overdraft at;another bank of $750. How much should it report as cash on the balance;sheet?;$38,500 $29,500 $37,750 $46,750;15.;Which of the following is not classified as cash on the;balance sheet? (Points: 6);Postage;stamps Post-dated;checks Cash;restricted for plant expansion All;of the above;16.Corresponds;to CLO 4(d);The month-end bank statement for Guthrie Motors shows a balance of $152,000;and a bank service charge of $40. Outstanding checks are $35,000, a deposit;of $10,000 was in transit at month end, and a check for $1,500 was;erroneously charged by the bank against the account. The correct balance in;the bank account at month end is (Points: 6);$125,000 $125,460 $128,500 $128,460;17.Corresponds;to CLO 5(a);As of December 31, Gammelguard Corporation has outstanding accounts;receivable of $1.5 million. Sales on credit during the year were $9;million. The allowance for doubtful accounts has a credit balance of $20,000.;If the company estimates that 9% of its outstanding receivables will be;uncollectible, what will be the amount of bad debt expense recognized for;the year? (Points: 6);$115,000 $135,000 $155,000 $810,000;18.Corresponds;to CLO 5(b);As of December 31, Wiliams Corporation has outstanding accounts receivable;of $3.6 million. Sales on credit during the year were $12.5 million. The;allowance for doubtful accounts has a credit balance of $62,000. If the;company estimates that 1% of its net credit sales will be uncollectible;what will be the amount of bad debt expense recognized for the year?;(Points: 6);$63,000 $125,000 $187,000 $360,000;19.Corresponds;to CLO 5(c);Kandris Corporation had a balance in accounts receivable of $450,000 and a;balance in allowance for doubtful accounts of $34,000, when management;decided the accounts receivable from Dunn Corporation of $1,800 had become;uncollectible. What journal entry should Kandris Corporation make to;write-off the uncollectible account? (Points: 6);Debit;Allowance for Doubtful Accounts, credit Accounts Receivable, $1,800 Debit;Allowance for Doubtful Accounts, credit Bad Debt Expense, $1,800 Debit;Bad Debt Expense, credit Allowance for Doubtful Accounts, $1,800 Debit;Accounts Receivable, credit Allowance for Doubtful Accounts, $1,800;20.Corresponds;to CLO 5(d);At December 31, Norman Industrial Inc. had account balances before year-end;adjusting entries for accounts receivable and the related allowance for;doubtful accounts of $850,000 and $79,000 respectively. An aging of;accounts receivable indicated that $88,000 of December 31, receivables are;expected to be uncollectible. The net realizable value of accounts;receivable after adjustment is (Points: 6);$938,000 $929,000 $771,000 $762,000;21.Corresponds;to CLO 6(a);The following is a record of Axis Corporation's inventory transactions for;the current month;June 1;Balance, 300 units @ $65 each;June 16;Sale, 400 units @ $90;June 14;Purchase 800 units @ $68 each;June 20;Sale, 500 units @ $90;June 25;Purchase 250 units @ $70;Axis uses the periodic inventory;system. Using the FIFO method, what is the amount of cost of goods sold for;the month?;(Points: 6);$61,700 $60,300 $58,500 $31,100;22.Corresponds;to CLO 6(b);The following is a record of Meyer Corporation's inventory transactions for;the current month;October 1;Balance, 500 units @ $24 each;October 9;Sale, 500 units @ $51;October 12;Purchase 900 units @ $26 each;October 19;Sale, 800 units @ $51;October 25;Purchase 600 units @ $27 each;Meyer uses the periodic;inventory system. Using the LIFO method, what is the amount of ending;inventory on October 31?;(Points: 6);$18,900 $16,800 $34,600 $17,200;23.Corresponds;to CLO 6(c);The following is a record of Tiller Corporation's inventory transactions;for the current month;January 1;Balance, 500 units @ $10 each;January 5;Sale, 290 units @ $25;January 11;Purchase, 300 units @ $12 each;January 13;Sale, 250 units @ $25;January 23;Purchase, 400 units @ $13 each;January 27;Sale, 310 units @ $25;Tiller uses the periodic inventory;system. Using the weighted-average inventory method, what is the cost;of goods sold for the month of January?;(Points: 6);$14,004 $9,775 $4,085 $4,025;24.Corresponds;to CLO 6(d);The following is a record of Caulder Corporation's inventory transactions;for the current month;March 1;Balance, 500 units @ $40 each;March 12;Sale, 200 units @ $85;March 16;Purchase, 300 units @ $42 each;March 22;Sale, 350 units @ $85;March 28;Purchase, 300 units @ $43 each;Caulder uses the perpetual inventory;system. Using the LIFO method, what is the ending inventory on;March 31?;(Points: 6);$22,900 $22,100 $22,600 $23,400;25.Corresponds;to CLO 7(a);In the context of dollar-value LIFO, when inventory in base year dollars;increases, (Points: 6);The;LIFO reserve decreases The;LIFO price index increases A;LIFO layer is created A;LIFO layer is liquidated;26.Corresponds;to CLO 7(b);Hemmer Corporation adopted the dollar-value LIFO method of inventory;valuation on December 31, 2011. Its inventory at that date was 450,000 and;the relevant price index was 100. Information regarding inventory for;subsequent years is as follows;Date;Inventory at Current Prices;Current Price Index;December 31, 2012;$513,600;107;December 31, 2013;$580,000;125;December 31, 2014;$650,000;130;What is the ending;inventory at December 31, 2012 under;dollar-value LIFO?;(Points: 6);$464,000 $464,980 $482,100 $497,080;27.Corresponds;to CLO 7(c);What is primary purpose of stating inventories at lower-of-cost-or-market?;(Points: 6);To;report a loss when there is a decrease in the future utility below the;original cost To;be conservative To;report a loss whenever there is a decrease in the future utility To;permit future profits to be recognized;28.Corresponds;to CLO 7(d);If the historical cost of product X is $64, the selling price of product X;is $90, the costs to sell product X are $14, the replacement cost for;product X is $55, and the normal profit margin is 30% of sales price, what;is the market value that should be used in the lower-of-cost-or-market;comparison? (Points: 6);$64 $49 $76 $55;29.Corresponds;to CLO 8(a);Energy Solutions Corporation estimates the cost of its physical inventory;at November 30 for use in an interim financial statement. Management uses a;gross profit rate on sales of 40%. The following information is available;Inventory, November 1;$500,000;Purchases during November;$650,000;Sales during November;$900,000;The estimated cost of inventory at;November 30 is;(Points: 6);$360,000 $540,000 $610,000 $650,000;30.Corresponds;to CLO 8(b);Which of the following is not a basic assumption of the;gross profit method of estimating inventory? (Points: 6);The;beginning inventory plus the purchases equal total goods to be accounted for. Goods;not sold must be on hand. The;sales, reduced to cost, deducted from the sum of the opening inventory plus;purchases, equal ending inventory. The;total amount of purchases and the total amount of sales remain relatively;unchanged from the comparable previous period.;31.Corresponds;to CLO 8(c);Arrow Corporation uses the conventional retail inventory method to value;its merchandise inventory. The following information is available for the;current year;Cost;Retail;Beginning Inventory;$30,000;$50,000;Purchases;$180,000;$250,000;Freight-In;$2,500;----;Net Markups;$8,500;Net Markdowns;$10,000;Employee Discounts;$1,000;Sales;$205,000;What is the cost to retail ratio?;(Points: 6);68.88% 68.07% 70.35% 70.83%;32.Corresponds;to CLO 8(d);Capital City Corporation uses the conventional retail inventory method to;determine its ending inventory at cost. The following information is;available for the current year;Cost;Retail;Beginning Inventory;$300,000;$420,000;Purchases;$1,450,000;$2,000,000;Net Markups;$80,000;Net Markdowns;$30,000;Sales;$1,900,000;Capital City determines that;the cost-to-retail ratio is 70%. What is the ending inventory at;cost?;(Points: 6);$520,000 $399,000 $300,000 $570,000


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