10.

Even though inventory is an asset, an error in ending inventory cost will cause net income to be erroneously reported.

		a. True
		b. False

20.

If outstanding checks are discovered during a bank reconciliation, the company must make an adjusting entry in its accounting records.

		a. True
		b. False

24.

A company may use the direct write-off method of accounting for uncollectible accounts receivable if the results of doing so are not materially different from the results obtained by using an estimating procedure.

	a.	True
	b.	False

25.

The revenue recognition principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

		a. True
		b. False

26.

Accounts receivable can be sold in order to have cash immediately available for use instead of waiting to collect from the customer.

		a. True
		b. False

28.

Generally Accepted Accounting Principles requires that accounts receivable and notes receivable should be written-off to expense immediately, if not collected by the due date.

		a. True
		b. False

29.

Rather than waiting 30 days to collect a receivable from a sale to a customer, the merchant factors that receivable with a finance company. The merchant will receive less cash from the factor than it would have received from the customer in 30 days.

		a. True
		b. False

31.

Cellar Company began December with 200 units of an item that cost $40 per unit. On 12/16 it purchased 600 more units at $50 each. Then on 12/22 Cellar Company sold 700 of those units for a price of $90 per unit. Using FIFO and perpetual inventory costing, Ending Inventory would be

		a. $ 4,000
		b. $ 5,000
		c. $ 9,000
		d. $10,000

32.

Cellar Company began December with 200 units of an item that cost $40 per unit. On 12/16 it purchased 600 more units at $50 each. Then on 12/22 Cellar Company sold 700 of those units for a price of $90 per unit. Using FIFO perpetual, Cost of Goods Sold would be

		a. $ 63,000
		b. $ 34,000
		c. $ 33,000
		d. $ 28,000

33.

Cellar Company began December with 200 units of an item that cost $40 per unit. On 12/16 it purchased 600 more units at $50 each. Then on 12/22 Cellar Company sold 700 of those units for a price of $90 per unit. Using FIFO, Gross Profit would be

		a. $ 63,000
		b. $ 29,000
		c. $ 30,000
		d. $ 31,000

34.

Cellar Company began December with 200 units of an item that cost $40 each. On 12/16 it purchased 600 more units at $50 each. Then on 12/22 Cellar Company sold 700 of those units for a price of $90 per unit. Using LIFO perpetual, Ending Inventory would be

		a. $ 3,000
		b. $ 4,000
		c. $ 5,000
		d. $ 9,000
		e. $ 8,000

35.

Cellar Company began December with 200 units of an item that cost $40 each. On 12/16 it purchased 600 more units at $50 each. Then on 12/22 Cellar Company sold 700 of those units for a price of $90 per unit. Using LIFO perpetual, Cost of Goods Sold would be

		a. $ 34,000
		b. $ 33,000
		c. $ 30,000
		d. $ 29,000