# Accountancy: Practice Preview

Pages: 4 (783 words) Published: November 29, 2014
﻿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...

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