True/False Questions

1. The entry to write off an uncollectible account receivable has no effect on the total assets of the company.

2. The quick ratio includes cash, inventory and net accounts receivable in the numerator.

3. The days sales in accounts receivable ratio measures how long it takes for a company to collect its accounts receivable.

4. Under FIFO, the cost of goods sold comes from the oldest purchases.

5. When using a perpetual inventory recording system, a company will debit inventory and credit cost of goods sold every time a sale takes place.

6. When prices are rising, LIFO will result in the lowest net income

7. Inventory turnover is calculated by dividing sales revenue by average inventory and multiplying by 365 days in a year.

8. If a companys selling price for inventory falls below the cost of that inventory, the value of the inventory asset is adjusted.

9. When selling an asset, a loss is recorded if the net book value of the asset is less than the cash received.

10 .The net book value of an asset is its cost minus its residual value.