clem_284_e2a_s06

clem_284_e2a_s06 - Accounting 284 1 Exam 2 Clem A Spring...

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Exam 2 A – Clem Spring 2006 1. A deposit in transit on a bank reconciliation should be a. added to the depositor's book cash balance. b. subtracted from the depositor's book cash balance. c. added to the bank statement balance. d. subtracted from the bank statement balance. 2. Under the periodic inventory system: a. a transaction by transaction unit inventory record is maintained. b. the cost of goods sold for each sale is recorded at the time each sale is made. c. a separate account for purchases is used. d. a continuous inventory record provides the amount of ending inventory and the cost of goods sold throughout the period. 3. In recording the year-end adjusting entry for bad debt expense, a company would a. increase accounts receivable. b. decrease bad debts expense. c. decrease allowance for doubtful accounts. d. increase allowance for doubtful accounts. 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. 5. Discontinued operations are a. the amount reflected on the income statement for adjustments made to balance sheet accounts when applying different accounting principles. b. the result of the disposal of a major segment of the business. c. a gain or loss that is both unusual in nature and infrequent in occurrence. d.
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This note was uploaded on 09/23/2009 for the course ACCT 284 taught by Professor Clem during the Spring '08 term at Iowa State.

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clem_284_e2a_s06 - Accounting 284 1 Exam 2 Clem A Spring...

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