ACC 311 Exam2 MC Questions

ACC 311 Exam2 MC Questions - EXAM II. SECTION I - MULTIPLE...

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EXAM II. SECTION I - MULTIPLE CHOICE (50 points - 2 points each) - Please choose the BEST answer for each question and record your answer on the Scantron answer sheet. 1. A company had credit sales of $5.0 million for the year and estimates their bad debts to be 1% of net credit sales. The accountant for the company is thinking about switching to the aging of accounts receivable method. Accounts receivable has a $450,000 balance, $400,000 of which is not yet due and $50,000 is past due. From company history the accountant estimates 8% of amounts not yet due and 32% of amounts past due will not be collected. Allowance for doubtful accounts has a credit balance of $3,000 prior to the bad debt adjustment. The journal entry to record bad debts expense when the aging of accounts receivable method is used would be: A) A debit to the bad debts expense account for $50,000 and a credit to accounts receivable for $50,000. B) A debit to bad debts expense for $45,000 and a credit to the allowance for doubtful accounts for $45,000. C) A debit to bad debts expense for $50,000 and a credit to the allowance for doubtful accounts for $50,000. D) A debit to bad debts expense for $47,000 and a credit to accounts receivable for $47,000. 2. Which of the following is true about Visa or Mastercard sales? A) Acceptance of credit cards usually leads to increased sales. B) Acceptance of credit cards reduces losses related to bad checks and uncollectible accounts. C) The retailer eventually receives the same amount of money on a given sale regardless of whether the customer paid with cash or used a credit card. D) Both A and B are true. E) All of the above are true. 3. On March 10, Anthony Company received merchandise for resale from its normal supplier. The price was $3,600 with terms of 2/10, n/30 for 100 units of Part #345. The invoice was paid on March 17. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the average unit cost that should be recorded for each of the 100 units of Part # 345? A) $36.48. B) $37.20. C) $36.00. D) $37.56. E) None of the above is correct.
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4. Under the lower-of-cost-or-market basis for valuing inventory if replacement cost of an item in inventory has declined during a given accounting period, A) pretax income and the amount of ending inventory will be reduced for the period in which the merchandise is sold. B) pretax income and the amount of ending inventory will be reduced for the period during which the decline in market value occurred. C) pretax income will be reduced for the period during which the decline in market value occurred and the amount of ending inventory will decline for the period in which the merchandise is sold. D) A and B are both correct.
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This note was uploaded on 07/17/2008 for the course ACC 311 taught by Professor Charrier during the Spring '08 term at University of Texas at Austin.

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ACC 311 Exam2 MC Questions - EXAM II. SECTION I - MULTIPLE...

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