F09_MT2_revisedkey

F09_MT2_revisedkey - 136A fall 09 MIDTERM 2 v. 1 Name

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Unformatted text preview: 136A fall 09 MIDTERM 2 v. 1 Name _________________________ Answer questions #1-25 on your green scantron--WRITE YOUR VERSION # ON YOUR SCANTRON PLEASE!!! Answer the remaining questions in your blue-books. 1. Which of the following methods of determining bad debt expense does not properly match expense and revenue? a. Charging bad debts with an amount derived from aging accounts receivable under the allowance method. b. Charging bad debts as accounts are written off as uncollectible. c. Charging bad debts with a percentage of sales under the allowance method. d. Charging bad debts with an amount derived from a percentage of accounts receivable under the allowance method. 2. An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true? a. The closing inventory of the current year is understated. b. Income of the following year will be understated. c. The cost of sales of the following year will be understated. d. The current year's income is understated. 3. Which of the following is correct? a. Interest costs for routine inventories are product costs. b. All of these. c. Selling costs are product costs. d. Manufacturing overhead costs are product costs. 4. XYZ, Inc. ships goods FOB shipping point which are in transit at the end of the year. As of the end of the year, XYZ should do what with respect to this inventory? a. Include in inventory until the bill from the trucking company is received. b. Include in inventory until the customer pays the invoice. c. Exclude from inventory. d. Include in inventory. 5. Which of the following methods of determining annual bad debt expense best achieves the matching concept? a. Percentage of average accounts receivable b. Direct write-off c. Percentage of sales d. Percentage of ending accounts receivable MIDTERM 2 v. 1--Page 2 6. Inventory is recorded under LIFO by the accounting system at a cost of $10,000. The inventory is expected to sell for $11,000, it would cost $9,900 to replace, $200 in commissions to sell, and has a normal profit margin of 20%. Which of the following is true of this inventory? a. The designated market value is $11,000 and the inventory should be reported on the balance sheet at $10,000. b. The designated market value is $9,900 and the inventory should be reported on the balance sheet at $9,900. c. The designated market value is $10,800 and the inventory should be reported on the balance sheet at $10,000. d. The designated market value is $9,900 and the inventory should be reported on the balance sheet at $10,000....
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This note was uploaded on 05/18/2011 for the course ECON 136A taught by Professor Anderson during the Spring '08 term at UCSB.

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F09_MT2_revisedkey - 136A fall 09 MIDTERM 2 v. 1 Name

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