136a_1_s06_mt2

136a_1_s06_mt2 - May 22, 2006 Anderson ECON 136A Midterm #2...

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May 22, 2006 Anderson ECON 136A Midterm #2 Name _________________________ Complete questions 1-15 (multiple choice) on green scantron with pencil, and the rest, #16-21 (problems/ short answers) in your blue-book. 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. The category "trade receivables" includes a. advances to officers and employees. b. income tax refunds receivable. c. claims against insurance companies for casualties sustained. d. none of these. 3. 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. 4. A company using the percentage of sales method has gone through its normal process of allowing for doubtful accounts, and written off certain accounts. Subsequently one of the balances they wrote-off has been paid by the customer! This should: a. Result in a credit to the income statement b. Reduce the allowance for bad debts c. Increase the allowance for bad debts d. Increase the bad debt expense 5. 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 $50,000. Also during the year, the Company dertermined that the uncollectible accounts to be written-off are $5,000. Subsequent to writing off balances, they received $1,000 on accounts previously written off. The proper amount for them to include as bad debt expense during the year is: a. $55,000 b. $45,000 c. $49,000 d. $51,000
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Midterm #2--Page 2 6. When using a perpetual inventory system, a. no Purchases account is used. b. a Cost of Goods Sold account is used. c. two entries are required to record a sale. d. all of these. 7. Goods in transit which are f.o.b. shipping point should be a. included in the inventory of the seller. b. included in the inventory of the buyer. c. included in the inventory of the shipping company. d. none of these. 8. Dane Co. received merchandise on consignment. As of March 31, Dane had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be a. no effect. b. net income was correct and current assets and current liabilities
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136a_1_s06_mt2 - May 22, 2006 Anderson ECON 136A Midterm #2...

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