Quiz 9 ch9 and ch7 Key

Quiz 9 ch9 and ch7 Key - 4 When the allowance method of...

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Quiz 8 (ch9 Inventory and ch7 Receivables) Key 1. The use of the gross profit method assumes 1. the amount of gross profit is the same as in prior years. 2. sales and cost of goods sold have not changed from previous years. 3. inventory values have not increased from previous years. 4. the relationship between selling price and cost of goods sold is similar to prior years. 2. An overstatement of ending inventory in Period 1 would result in income of Period 2 being 1. overstated. 2. understated. 3. correctly stated. 4. The answer cannot be determined from the information given. 3. Bistro Company wrote off an $800 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,100. The current ratio after the write-off of the uncollectible account 1. would be less than before the write-off of the account. 2. would be greater than before the write-off of the account. 3. would be the same as before the write-off of the account. 4. cannot be determined with the information given.
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Unformatted text preview: 4. When the allowance method of recognizing bad debt expense is used, the entry to record bad debt expense at the end of period would 1. decrease the accounts receivable balance and decrease net income. 2. has no effect on asset balance. 3. have no effect on net income. 4. increase the accounts receivable balance and increase net income. 5. A method of estimating bad debts that focuses on the balance sheet rather than the income statement is the allowance method based on 1. direct write-off. 2. aging the receivable accounts. 3. credit sales. 4. specific accounts determined to be uncollectible. 6.The entry Accounts Receivable xxx Allowance for Uncollectible Accounts xxx would be made when 1. a customer pays its account balance. 2. a customer defaults on its account. 3 a previously defaulted customer pays its outstanding balance. 4. estimated uncollectible receivables are too low....
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