8AM_MT2 - Anderson ECON 136A Midterm#2 Name Complete the...

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February 23, 2005 Anderson ECON 136A Midterm #2 Name _________________________ Complete the multiple choice on green scantron and problems in your blue- book. WRITE YOUR NAME ON YOUR EXAM AND TURN IT IN WITH YOUR BLUE BOOK AND SCANTRON at the end of the test. Write your name and perm # on the scantron and blue-book before turning in. ------------------------- Complete on scantron. 1. Which of the following is NOT considered cash for financial reporting purposes? a. Petty cash funds and change funds b. Money orders, certified checks, and personal checks c. Coin, currency, and available funds d. Postdated checks and I.O.U.'s 2. If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be a. reported as a deduction from sales in the income statement. b. reported as an item of "other expense" in the income statement. c. reported as a deduction from accounts receivable in determining the net realizable value of accounts receivable. d. reported as sales discounts forfeited in the cost of goods sold section of the income statement. 3. Which of the following methods of determining annual bad debt expense best achieves the matching concept? a. Percentage of sales b. Percentage of ending accounts receivable c. Percentage of average accounts receivable d. Direct write-off 4. At the close of its first year of operations, December 31, 2004, the Linn Company had accounts receivable of $490,000, after deducting the related allowance for doubtful accounts. During 2004, the com- pany had charges to bad debt expense of $90,000 and wrote off, as uncollectible, accounts receivable of $40,000. What should the company report on its balance sheet at December 31, 2004, as accounts receivable before the allowance for doubtful accounts? a. $620,000 b. $540,000 c. $440,000 d. $360,000
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------------------------------ A trial balance before adjustments included the following: Debit Credit Sales $425,000 Sales returns and allowance $14,000 Accounts receivable 53,000 Allowance for doubtful accounts 760 5. If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the adjustment is a. $4,000. b. $4,111. c. $4,250. d. None of the above 6. If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the adjustment is a. $4,540. b. $4,000. c. $5,300. d. $6,060. 7. If a company's general ledger indicates that the cash balance at the end of the year is negative, this should be presented in the financial statements: a. As a current liability b. Labeled "bank overdraft" c. As cash, negative d. Both a and b e. None of the above 8. A company employs the percentage of sales method for estimating the allowance for doubtful accounts. Using this method, they estimated during the year that the bad debt expense is $100,000. Also during the year, the Company dertermined that the uncollectible accounts to be written-off are $20,000. The proper amount for them to include
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8AM_MT2 - Anderson ECON 136A Midterm#2 Name Complete the...

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