1.The Snella Corporation uses the allowance method to account for bad debts. How does the write-off of an account receivable affect Retained Earnings and the NRV of Receivables, respectively?

Select one:

a. Decrease, No Effect

b. Decrease, Decrease

c. No Effect, Decrease

d. Increase, Decrease

e. No Effect, No Effect

2.The borrowing of funds secured with accounts receivable is:

Select one:

a. Discounting

b. Securitizing

c. Pledging

d. Factoring

3.When the FIFO method is used, Cost of Goods Sold is assumed to consist of:

Select one:

a. The most recently purchased units

b. The oldest units

c. The units with the highest per unit cost

d. The units with the lowest per unit cost

4.The CQ Company uses the periodic method for inventory. All sales and purchases are on credit. How does CQ account for a return of merchandise from a customer?

Select one:

a. Debit Sales Return, Credit Accounts Receivable

b. Debit Accounts Receivable, Credit Sales Receivable

c. Debit Inventory, Credit Cost of Goods Sold

d. Debit Inventory, Credit Accounts Receivable

e. Debit Accounts Receivable, Credit Sales Return

5.Which inventory method is the least susceptible to income manipulation? 

Select one:

a. Average cost

b. LIFO

c. Whichever method is used for tax purposes

d. FIFO