Question
Based on the following information for calendar 2021: Accounts receivable, January 1 $125,000 Credit sales during the year 1,400,000 Allowance for doubtful accounts, January 1
Based on the following information for calendar 2021:
Accounts receivable, January 1 | $125,000 |
---|---|
Credit sales during the year | 1,400,000 |
Allowance for doubtful accounts, January 1 | 15,000 |
Cash collected on accounts receivable during the year | 1,350,000 |
If the allowance for doubtful accounts is estimated at 10% of the ending accounts receivable balance, what is the bad debts expense for 2021?
A.
$17,500
B.
$2,500
C.
$1,500
D.
9,500
SECOND QUESTION
Tyco Ltd. entered into a contract to build a sports arena for
$1,800,000.
Construction commenced on August 1, 2020, with a planned completion date of December 31, 2022. A summary of the related accounting information is provided below:
THIRD QUESTION
A correction of an accounting error does NOT involve _______.
A.
management bias
B.
retrospective restatement
C.
retrospective adjustment
D.
note disclosure
2020 | 2021 | 2022 | |
---|---|---|---|
Costs incurred during the year | $400,000 | $500,000 | $650,000 |
Estimated costs to complete at year-end | 1,200,000 | 600,000 | 0 |
Billings during the year | 560,000 | 640,000 | 700,000 |
Cash collections during the year | 500,000 | 310,000 | 990,000 |
How much would the balance in accounts receivable be on the balance sheet of Tyco at the end of 2020 if Tyco uses the percentage of completion method?
A.
$500,000
B.
$660,000
C.
$110,000
D.
60,000
4)Based on the following information, what is the impairment amount to be recorded?
Cost | $750,000 |
---|---|
Accumulated depreciation | 530,000 |
Value in use (sum of discounted cash flows) | 130,000 |
Fair value | 140,000 |
Disposal costs | 15,000 |
A.
$125,000
B.
$130,000
C.
$90,000
D.
220,000
5)
Assume that a $500 purchase invoice received close to year-end is NOT recorded in fiscal 2019, but the inventory is appropriately included in the ending inventory count. What impact will this have on fiscal 2020 financial reporting?
A.
No effect on gross margin.
B.
Operating expenses are overstated by $500.
C.
Operating profit is overstated by $500.
D.
Cost of sales is understated by $500.
6)
What is the most commonly used measurement basis?
A.
Historical cost.
B.
Present value.
C.
Current cost.
D.
Realizable value.
7)
Which is NOT a criteria for recognition of financial information in the IFRS Conceptual Framework?
A.
Inflow or outflow of cash flows are probable.
B.
The amount is reasonably measurable.
C.
The amount must be measured at historical cost.
D.
The expenses should be matched with revenues.
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