1. Accountants argue that which of the following approaches to estimating Allowance for Doubtful Accounts provides a realistic estimate of the net receivables?

a. taking a percentage of net sales

b. taking a percentage of revenue

c. aging the accounts receivable

d. analyzing the sales on account

2.

The gross profit method estimates the ending inventory and cost of goods sold by using the firm's normal gross profit as a percentage of net sales.

True

False

3.

Last year, the Tilden Co. had credit sales in the amount of $470,000, and it had uncollectible accounts in the amount of $4,700. Based on last year, what would the percent of estimated uncollectible accounts be this year?

a. 1%

b. 10%

c. 4%

d. 4.7%

4.

Merchandise Inventory is listed as a(n)

a. current liability.

b. current asset.

c. revenue.

d. expense.

5.

Quick assets include cash and other noncurrent assets that can be converted into cash quickly.

True

False

6.

Quick assets include cash and other noncurrent assets that can be converted into cash quickly.

True

False

7.

The income summary account, after adjusting entries are posted, reflects the

a. beginning inventory amount.

b. beginning and ending inventory amounts.

c. cash income from business transactions.

d. ending inventory amount.

8.

Accurate inventory amounts are not necessary for accounting purposes because an error in inventory will "wash out" over a two-year period.

True

False

9.

The accounting concept that states expenses should be recognized in the same period with the revenues they helped to produce is the

a. allowance method.

b. matching principle.

c. uncollectible accounts technique.

d. contra-account principle.

10.

Which of the following is an advantage of using the direct write-off method?

a. The amount of Accounts Receivable reported on the balance sheet does not represent the amount of cash actually expected to be collected.

b. The revenue associated with the sale might be recognized in one period and the expense resulting from the uncollectible account recognized in another.

c. It is very simple to apply.

d. The amount of Bad Debt Expense recognized in a given period is subject to manipulation by management.

11.

Under the percentage of sales method, the adjusting entry at the end of the period for bad debt expense is affected by the current balance in the Allowance for Doubtful Accounts account.

True

False

12.

The adjusting entry to record an increase in Allowance for Doubtful Accounts involves

a. debiting Allowance for Doubtful Accounts and crediting Bad Debt Expense.

b. debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts.

c. debiting Allowance for Doubtful Accounts and crediting Accounts Receivable.

d. debiting Accounts Receivable and crediting Bad Debt Expense.

13.

The adjusting entry to record an increase in Allowance for Doubtful Accounts involves

a. debiting Allowance for Doubtful Accounts and crediting Bad Debt Expense.

b. debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts.

c. debiting Allowance for Doubtful Accounts and crediting Accounts Receivable.

d. debiting Accounts Receivable and crediting Bad Debt Expense.

14.

The adjusting entry to record an increase in Allowance for Doubtful Accounts involves

a. debiting Allowance for Doubtful Accounts and crediting Bad Debt Expense.

b. debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts.

c. debiting Allowance for Doubtful Accounts and crediting Accounts Receivable.

d. debiting Accounts Receivable and crediting Bad Debt Expense.

15. Gross sales less sales returns and allowances and sales discounts equals .....................?

16.

The single-step form of income statement lists all revenue items and their totals first, followed by all expense items and their totals, to produce a difference that is either net income or net loss.

True

False

17.

Posting to the accounts payable ledger should be made at the end of the month.

True

False

18.

The following information was taken from the financial statements of Sunshine City:

Total current assets	$ 53,000
Property, plant, and equipment	6,000
Current liabilities	21,000
Long-term liabilities	4,000
Owner's equity	34,000
Beginning inventory	31,000
Ending inventory	33,000
Cost of goods sold	152,000
Net income	42,000

The inventory turnover (rounded to one decimal place) for Sunshine City is

a. 5.0 times.

b. 3.0 times.

c. 4.8 times.

d. 2.2 times.

19.

Entries required at the end of an accounting period to bring certain account balances up-to-date are known as adjusting entries.

True

False

20. A(n) ................... journal is designed for recording only certain kinds of transactions.

21. A(n) .................... journal is designed for recording only certain kinds of transactions.

22.

After aging the accounts receivable, it is estimated that $790 will not be collected and the allowance account has an existing debit balance of $230. The adjusting entry under the aging approach would be for the amount of

a. $560.

b. $1,020.

c. $230.

d. $790.