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saint MBA560 module 3 quiz (taken on 25 January 2014)

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Question;1.;Victorino Company accepted a credit card payment in exchange;for $10,000 of services provided to a customer. The credit card company;charges a 5% service charge. The collection of cash from the credit card;company when it settles the account receivable balance will;(Points: 2);increase assets by $9,500.decrease assets and equity by $500.increase assets by $10,000.none of the above.;Question 2.;2.;December 31, 2010, Landon Corporation estimated that 3% of;its credit sales of $215,000 would be uncollectible. Landon used the;allowance method for uncollectible accounts. February 15, 2011, Landon;wrote off the account of one customer, in the amount of $2,500. April 7;2011, the customer paid the account in full. Which of the following;answers correctly shows the effect of the December 31, 2010 adjusting;entry for uncollectible accounts on the financial statements of Landon;Corporation?RowAssets=Liab.+EquityRev.-Exp.=Net Inc.Cash FlowOne(6,450)=6,450+NANA-NA=NANATwo6,450=(6,450)+NANA-NA=NA(6,450)OAThree6,450=NA+6,450NA-(6,450)=6,4506,450 FAFour(6,450)=NA+(6,450)NA-6,450=(6,450)NA;(Points: 2);Row OneRow TwoRow ThreeRow Four;Question 3.;3.;On December 31, 2010, the Landon Corporation estimated that;3% of its credit sales of $215,000 would be uncollectible. Landon used;the allowance method of accounting for uncollectible accounts. On;February 15, 2011, Landon wrote off the account of one of its customers;in the amount of $2,500. On April 7, 2011, the customer paid the;account in full. Which of the following answers correctly states the effect of the reinstatement of the receivable on April 7, 2011? RowAssets=Liabilities+EquityRevenue-Expenses=Net Inc.CashOne(2,500)=2,500+NANA-NA=NA(2,500) OATwo2,500=NA+2,5002,500-NA=2,5002,500 OAThreeNA=NA+NANA-NA=NANAFour(2,500)=NA+(2,500)NA-2,500=(2,500)NA;(Points: 2);Row OneRow TwoRow ThreeRow Four;Question 4.;4.;To estimate the amount of its uncollectible accounts receivable, a company might;(Points: 2);consult industry publications.look at its past history of uncollectible accounts.take into account the current condition of the economy.all of the above.;Question 5.;5.;For a business, the advantage of offering credit to customers is that it;(Points: 2);increases the amount of sales.increases cash flow from financing activities.decreases cost of goods sold.decreases the amount of inventory the company needs to carry.;Question 6.;6.;On December 31, 2010, the Landon Corporation estimated that;3% of its credit sales of $215,000 would be uncollectible. Landon used;the allowance method of accounting for uncollectible accounts. On;February 15, 2011, Landon wrote off the account of one of its customers;in the amount of $2,500. On April 7, 2011, the customer paid the;account in full. Which of the following correctly states the answer on the effect of Landon?s write-off entry on February 15, 2011?RowAssets=Liab.+EquityRevenue-Expenses=Net Inc.CashOne(2,500)=NA+(2,500)NA-2,500=(2,500)(2,500)OATwoNA=NA+NANA-NA=NANAThreeNA=2,500+(2,500)NA-2,500=(2,500)NAFour2,500=NA+2,500NA-(2,500)=2,5002,500 OA;(Points: 2);Row OneRow TwoRow ThreeRow Four;Question 7.;7.;Which of the following is not considered a cost of extending credit to customers?;(Points: 2);The implicit interest chargeThe increased sales resulting from the extension of creditKeeping the records for accounts receivableThe possibility of unpaid account;Question 8.;8.;The net realizable value of accounts receivable is calculated;(Points: 2);Accounts Receivable + Uncollectible Accounts Expense.Accounts Receivable + Notes Receivable.Accounts Receivable ? Allowance for Doubtful Accounts.365/Accounts Receivable.;Question 9.;9.;On January 1, 2009, Plitkin Manufacturing Company spent;$3,000 on an asset (equipment) to improve its quality but not its useful;life. The asset had been purchased on January 1, 2006 for $14,000. The;asset had a $2,000 salvage value and a 6-year life. Plitkin;Manufacturing uses straight-line depreciation. What would be the amount;of depreciation expense for 2010?;(Points: 2);$4,500$3,000$6,000$7,200;Question 10.;10.;On September 10, 2009, Barden Company sold a piece of;equipment for $3,000. The equipment had an original cost of $17,000 and;accumulated depreciation of $15,500 at the time of the sale. Which of;the following correctly shows the effect of the sale on the 2009;financial statements? RowAssets=Liabilities+EquityRevenues or Gains-Expenses or Losses=Net Inc.CashOne1,500NA1,5001,500NA1,5003,000 OATwo(1,500)NA(1,500)NA1,500(1,500)3,000 IAThree1,500NA1,500NA(1,500)1,500NAFour1,500NA1,5001,500NA1,5003,000 IA;(Points: 2);Row OneRow TwoRow ThreeRow Four;Question 11.;11.;Which of the following is considered an accelerated depreciation method?;(Points: 2);Straight lineUnits of productionLIFODouble declining balance;Question 12.;12.;On January 1, 2009, Rowley Company purchased a truck that;cost $22,000. The truck had an expected useful life of 5 years and a;$4,000 salvage value. The amount of depreciation expense recognized in;2010 assuming that Rowley uses the double declining balance method is;(Points: 2);$4,320$5,280$7,200$8,800;Question 13.;13.;Which of the following would be classified as a long-term operational asset?;(Points: 2);Accounts ReceivableCashOffice EquipmentInventory;Question 14.;14.;Which of the following statements is correct regarding accounting treatment of goodwill?;(Points: 2);Goodwill is recorded as an asset and then amortized over a period of 5 years.Goodwill is recorded as an asset. It is not amortized but must be tested for impairment each year.Goodwill is recorded as an asset and amortized over 40 years unless its value decreases.Goodwill is expensed immediately in the year of purchase.;Question 15.;15.;The recognition of depletion expense acts to;(Points: 2);decrease assets and equity and increase cash flow from operating expenses.increase cash flow from operating activities and does not affect the amount of total assets.increase assets, equity, and cash flow from operating activities.decrease assets and equity, with no effect on cash flow.;Question 16.;16.;Which of the following terms is used to identify the expense recognition for intangible assets?;(Points: 2);AmortizationDepletionDepreciationAllocation;Question 17.;17.;Which of the following would most likely not be depreciated or amortized using the straight-line method?;(Points: 2);CopyrightsFranchiseTimber reservesTrademark;Question 18.;18.;In a period of rising prices, which inventory cost flow method will produce the lowest amount of cost of goods sold?;(Points: 2);FIFOWeighted averageLIFOAll methods will produce the same amount of cost of goods sold;Question 19.;19.;Frye Company uses the LIFO cost flow method. They had no;beginning inventory and Frye purchased 500 units of inventory that cost;$4.00 each. At a later date, the company purchased an additional 600;units of inventory that cost $4.50 each. If Frye sold 800 units of the;inventory, the amount of ending inventory appearing on the balance sheet;would be;(Points: 2);$1,400$1,350$1,200$1,450;Question 20.;20.;GAAP requires a company to provide financial statement users;with information about the accounting methods it has selected (including;inventory cost flow methods) this is called the;(Points: 2);consistency principle.financial statement discipline principle.full disclosure principle.cost flow and other inventory principles.

 

Paper#44495 | Written in 18-Jul-2015

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