Mini Test 2 Form A - Do NOT open your exam until you are...

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1 Do NOT open your exam until you are told to do so! While you are waiting please do the following: 1) Keep your exam closed but pull out your bubble-sheet 2) Using your pencil, fill in your last name & first initial your net id your UIN your section number TA Section Number Jeff Bubble Sheet Input AD1- 8 am 001 Jeff AD2- 9 am 002 Antoinette AD3- 10 am 003 Antoinette AD4-11 am 004 Jimmy AD5-12 pm 005 Jimmy AD6- 1 pm 006
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2 1. Bad debt expense should A. appear on the balance sheet as a contra-asset. B. appear on the income statement as part of selling expenses. C. appear on the income statement as a contra- revenue. D. not appear in the financial statements. E. None of the above is correct. 2. Which of the following controls found in the cash collection portion of the Sales/Collection cycle could be thought of as both preventative and detective? A. Security Cameras B. Bonding Employees C. Background Checks D. A and B only E. B and C only 3. When goods are shipped FOB Shipping Point with freight prepaid by the seller A. The seller records the freight expenditure as a selling expense (transportation out) B. The buyer will reimburse the seller thereby incurring an inventoriable product cost. C. Title Transfers at the point of shipment D. The inventory should remain on the sellers books until reimbursement (for shipping) is received from the buyer. E. Choices B and C Only F. None of the above 4. In the sales/collection process, the quantity of merchandise sold to a particular customer should be decided based on: A. The quantity of inventory on hand B. The customer's credit limit C. The potential for future sales with this customer D. The importance of the customer E. None of the above 5. For a typical manufacturing company, the most common point for recognizing revenue is the date: A. An order is received. B. Production is completed. C. The product is delivered. D. Payment is received. E. None of the above
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3 6. A company that sells magazines and collects subscription fees prior to the publication and distribution of the magazine. As the cash is received in advance from the customers, the company should record a debit to Cash and a credit to A. Sales revenue. B. Prepaid expenses. C. Unearned revenue. D. Accounts payable. E. None of the above is correct. 7. Which of the following control procedures should be performed before accepting a customer order? A. Independent credit check B. Physical verification (i.e. count) of merchandise prior to shipment C. Verification of in-stock inventory quantities. D. A and C only E. All of the above 8. Lincoln Corporation had beginning balances in it's accounts receivable of $500,000 and of $75,000 in its Allowance for Uncollectible Accounts. The company estimates and records bad debt expense using the income statement method estimating 3% of credit sales as uncollectible. Collections on receivables were strong this year, totaling $1,500,000 and actual write offs of receivables were only $50,000. If the ending accounts receivable balance was $1,450,000 , what was the total credit sales earned for the
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This note was uploaded on 02/14/2011 for the course ACCY 202 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Mini Test 2 Form A - Do NOT open your exam until you are...

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