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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