Sol_practice questions _ Final exam 2008

Sol_practice questions _ Final exam 2008 - SOLUTIONS...

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1 SOLUTIONS Practice questions for final exam PLEASE NOTE: The purpose of this document is to help you review the material and PRACTICE. Some questions might be harder than the real exam while some might be easier. There is NO guarantee that the real exam will be similar to this one. This document also does NOT necessarily cover all the material. Section A. Accounts Receivable B. Inventory C. Property, Plant and Equipment D. Financial Statement Analysis E. Bonds
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2 Section A: Accounts Receivables Part I: multiple choice questions, choose the single best answer 1. ___A____ Angela Corporation writes off an uncollectible account of a bankrupt customer. How would this transaction affect net income and net account receivable? Net income Net account receivable a. No effect No effect b. No effect Increase c. Increase No effect d. Decrease No effect e. Increase Increase Part II: calculation question To address this part of the problem please refer to the information provided in the Financial Statements of Bull’s Eye Company that are included at the end of the practice question. REQUIRED: Assuming that all sales are on credit, compute the total amount of cash collected from sales during 2003. You must label and circle your answer for full credit Allowance for Doubtful Accounts 36 Beginning Balance 40 Bad Debt Expense Write-offs (plug) 56 20 Ending Balance Accounts Receivable Beginning Balance 261= (225+36) 56 Write-offs Sales 465 475 Cash Collected Ending Balance 195= (175+20)
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Section B: Inventory Part I: multiple choice questions, choose the single best answer 1. ________ In periods of rising prices , which of the following statements is most likely to be true? a. FIFO may result in a lower ending inventory than LIFO. b. FIFO may result in a lower cost of goods sold than LIFO. c. FIFO may result in a lower profit margin than LIFO. d. FIFO may result in a lower net income than LIFO. e. In periods of rising prices, none of the above statements is likely to be true. (Rising prices – FIFO method results in lower cost, higher net income) 2. ________ Which of the following statements about the selection of a cost flow assumption is correct? a. Management may use LIFO for income tax purposes only if it also uses LIFO in its financial statement. b. Management needs to match the cost flow assumption to the physical flow of the goods. c. Management must select the method that consistently provides the most net income. d. Management must use the method that is standard in its industry. Part II: Calculation question Peeke Company has the following inventory information: Beginning Inventory 100 units @ $30.00 per unit Purchase #1 60 units @ $35.00 per unit Purchase #2 40 units @ $40.00 per unit Units sold 170 units Required: Use the above information to fill in the following table for this year. Cost of goods sold, $
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This note was uploaded on 06/23/2008 for the course ACCT 410x taught by Professor Bonner during the Spring '06 term at USC.

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Sol_practice questions _ Final exam 2008 - SOLUTIONS...

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