Accountancy: Practice Preview
ACC231 – Fall 2014 – Exam 2 Practice Preview - KEY
Fall 2014 ⋅ Copyright © School of Accountancy, Arizona State University
1. What is the gain or loss on the sale of equipment that originally cost $20,000, has
$14,000 of accumulated depreciation and is sold for $11,000?
a. $9,000 loss
b. $23,000 loss
c. $5,000 gain
d. $3,000 loss
2. On February 1, 2014, Bob Inc., has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable -- $330,000; Allowance for Doubtful Accounts -- $11,000. During 2014, Bob had $3,350,000 of credit sales, collected $3,290,000 of accounts receivable, and wrote off $14,000 of accounts receivable as uncollectible. At year end, Bob performs an aging of its accounts receivable and estimates that $8,000 will be uncollectible. What will be the amount of the AJE at year end to adjust the allowance for doubtful accounts?
a. $19,000
b. $33,000
c. $8,000
d. $11,000
e. Subtract $3,000
3. Which of the following concepts is the reason a company can't switch its inventory costing method to a different method each year?
a. Materiality principle
b. Historical Cost concept
c. Matching concept
d. Consistency principle
e. Reliability principle
4. At the beginning of the year, Accounts Receivable had a balance of $510,000 and the Allowance for Doubtful Accounts had a balance of $30,000 (assume a normal balance for these account types). During the year, credit sales were $3,500,000 and cash collections on accounts receivable were $3,600,000. In addition, $27,000 in accounts receivable were written off during the year. If the company uses the
Allowance method and estimates that 1% of Credit Sales will be uncollectible, what is the year-end balance of the allowance account after all AJEs?
a. $32,000
b. $38,000
c. $36,000
d. $35,000
e. $65,000
5. Highgarden Dairy’s physical flow of goods is to sell the oldest items first. When they cost their inventory, they
a. Must use average cost to cost inventory transactions
b.
Fall 2014 ⋅ Copyright © School of Accountancy, Arizona State University
1. What is the gain or loss on the sale of equipment that originally cost $20,000, has
$14,000 of accumulated depreciation and is sold for $11,000?
a. $9,000 loss
b. $23,000 loss
c. $5,000 gain
d. $3,000 loss
2. On February 1, 2014, Bob Inc., has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable -- $330,000; Allowance for Doubtful Accounts -- $11,000. During 2014, Bob had $3,350,000 of credit sales, collected $3,290,000 of accounts receivable, and wrote off $14,000 of accounts receivable as uncollectible. At year end, Bob performs an aging of its accounts receivable and estimates that $8,000 will be uncollectible. What will be the amount of the AJE at year end to adjust the allowance for doubtful accounts?
a. $19,000
b. $33,000
c. $8,000
d. $11,000
e. Subtract $3,000
3. Which of the following concepts is the reason a company can't switch its inventory costing method to a different method each year?
a. Materiality principle
b. Historical Cost concept
c. Matching concept
d. Consistency principle
e. Reliability principle
4. At the beginning of the year, Accounts Receivable had a balance of $510,000 and the Allowance for Doubtful Accounts had a balance of $30,000 (assume a normal balance for these account types). During the year, credit sales were $3,500,000 and cash collections on accounts receivable were $3,600,000. In addition, $27,000 in accounts receivable were written off during the year. If the company uses the
Allowance method and estimates that 1% of Credit Sales will be uncollectible, what is the year-end balance of the allowance account after all AJEs?
a. $32,000
b. $38,000
c. $36,000
d. $35,000
e. $65,000
5. Highgarden Dairy’s physical flow of goods is to sell the oldest items first. When they cost their inventory, they
a. Must use average cost to cost inventory transactions
b.