F09_MT2_revisedkey

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

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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? 3. Which of the following is correct? 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? 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
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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?
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