Mini Test 2 Form B Solutions - Mini Test 2 SP 2010 B Key 1....

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Mini Test 2 SP 2010 B Key 1. Of the revenue recognition methods studied in class, which method would be considered the least conservative method? A. The Point- of -sale (i.e. title transfer) B. The Installment Method C. The Balance Sheet Method D. The Cost-Recovery Method E. All of the above methods are equally conservative. 2. Which of the following steps in the sales/collection process occurs last? A. Bill the customer. B. Collect payment. C. Ship the product. D. Approve credit. E. Record the sale 3. A check that was outstanding on last period's bank reconciliation was not among the checks shown as clearing the bank in the current period. As a result, in preparing this period's reconciliation, the amount of this check should be: A. Added to the book balance of cash. B. Deducted from the book balance of cash. C. Added to the bank balance of cash. D. Deducted from the bank balance of cash. E. Ignored in preparing the current period bank reconciliation. 4. At December 31, 2009, Amy Jo's Appliances had an unadjusted account balance of $300,000 in accounts receivable and a $1,000 unadjusted debit balance in the allowance for doubtful accounts. These unadjusted balances were after taking in to account the 2009 bad debt write-offs which totaled $5,000. Amy Jo bases her estimate of bad debt on a % of current period credit sales. Using this method it was determined that $9,000 of the 2009 credit sales would not be collected. Bad debt expense for 2009 should be: A. $5,000. B. $6,000. C. $8,000. D. $9,000 E. $10,000
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Champion Sound & Design (lab #3) has provided you with the following set of comparative accrual basis financial statements. Please use these financial statements to answer question #5 and question #6. 5. Using Champion Sound and Design's comparative financial statements provided on the previous pages, please calculate the amount of cash paid by Champion for rent in 2007. A. -0- B. $200,000 C. $400,000 D. $600,000 E. None of the above 6. Using Champion Sound and Design's comparative financial statements provided on the previous page, please calculate the amount of cash paid by Champion for salaries in 2007. A. $260,000 B. $262,500 C. $265,000 D. $270,000 E. None of the above 7. Gains differ from revenues because gains: A. are the result of sales to customers in the ordinary course of business. B. increase income from operations on the multi-step income statement. C. are recorded directly to retained earnings. D. are initially deferred by being capitalized to a balance sheet account. E. are not from transactions involving the entity's primary, recurring business operations.
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8. A company had the following partial list of account balances at year-end. All accounts have normal balances. Deferred Gross Profit on Installment Sales
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Mini Test 2 Form B Solutions - Mini Test 2 SP 2010 B Key 1....

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