# 24_Accounting MCQs

Question # 00005916 Posted By: ACCOUNTS_GURU Updated on: 12/29/2013 07:59 AM Due on: 12/31/2014
Subject Accounting Topic Accounting Tutorials:
Question
 9. Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of \$6,000,000. Additional information related to the project includes: costs incurred during the year were \$1,400,000; estimated costs to complete as of December 31, 2013 were \$2,100,000. What amount should Jot recognize as gross profit for the project in 2013?

\$700,000
\$1,000,000
\$1,500,000
\$2,500,000

 10. Swift Builders, Inc. uses the completed-contract method of accounting for a \$450,000 contract that it expects will take two years to complete. At December 31, 2013, the end of the first year of the contract, additional information related to the project includes: costs incurred to date were \$290,000; estimated costs to complete were \$180,000; billings to date were \$325,000; collections to date were \$300,000. What amount should Swift recognize as gross profit or loss for 2013?

\$ -0-
a \$20,000 loss
a \$40,000 loss
a \$110,000 loss

 11. Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes: installment sales totaled \$400,000 for 2013 and \$500,000 for 2014; cost of sales were \$260,000 for 2013 and \$300,00 for 2014; in 2013 Miller collected \$280,000 from 2013 sales; in 2014 Miller collected \$100,000 from 2013 sales and \$300,000 from 2014 sales. What amount should Miller report as realized gross profit on the 2014 income statement?

\$155,000
\$120,000
\$98,000
\$35,000

 12. In a consignment sale, the consignor (Points : 6)

does not show the merchandise as an asset on its books.
recognizes revenue only after receiving notification of sale and the cash remittance from the consignee.
recognizes revenue when it ships merchandise to the consignee.
periodically prepares an "account report" for the consignee.

13.
If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?

 Cash in bank \$25,700 Cash on hand \$620 Post-dated checks \$1,680 Certificates of deposit \$80,000

\$80,000
\$28,000
\$26,320
\$620

 14. At December 31, 2013, Vega Vacuum Corporation has cash in bank of 38,500, restricted cash in a separate account of \$9,000, and a bank overdraft at another bank of \$750. How much should it report as cash on the balance sheet?

\$38,500
\$29,500
\$37,750
\$46,750

 15. Which of the following is not classified as cash on the balance sheet? (Points : 6)

Postage stamps
Post-dated checks
Cash restricted for plant expansion
All of the above

 16.Corresponds to CLO 4(d) The month-end bank statement for Guthrie Motors shows a balance of \$152,000 and a bank service charge of \$40. Outstanding checks are \$35,000, a deposit of \$10,000 was in transit at month end, and a check for \$1,500 was erroneously charged by the bank against the account. The correct balance in the bank account at month end is (Points : 6)

\$125,000
\$125,460
\$128,500
\$128,460

 17.Corresponds to CLO 5(a) As of December 31, Gammelguard Corporation has outstanding accounts receivable of \$1.5 million. Sales on credit during the year were \$9 million. The allowance for doubtful accounts has a credit balance of \$20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)

\$115,000
\$135,000
\$155,000
\$810,000

 18.Corresponds to CLO 5(b) As of December 31, Wiliams Corporation has outstanding accounts receivable of \$3.6 million. Sales on credit during the year were \$12.5 million. The allowance for doubtful accounts has a credit balance of \$62,000. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)

\$63,000
\$125,000
\$187,000
\$360,000

 19.Corresponds to CLO 5(c) Kandris Corporation had a balance in accounts receivable of \$450,000 and a balance in allowance for doubtful accounts of \$34,000, when management decided the accounts receivable from Dunn Corporation of \$1,800 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 6)

Debit Allowance for Doubtful Accounts, credit Accounts Receivable, \$1,800
Debit Allowance for Doubtful Accounts, credit Bad Debt Expense, \$1,800
Debit Bad Debt Expense, credit Allowance for Doubtful Accounts, \$1,800
Debit Accounts Receivable, credit Allowance for Doubtful Accounts, \$1,800

 20.Corresponds to CLO 5(d) At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of \$850,000 and \$79,000 respectively. An aging of accounts receivable indicated that \$88,000 of December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 6)

\$938,000
\$929,000
\$771,000
\$762,000

21.Corresponds to CLO 6(a)
The following is a record of Axis Corporation's inventory transactions for the current month:

 June 1 Balance, 300 units @ \$65 each June 16 Sale, 400 units @ \$90 June 14 Purchase 800 units @ \$68 each June 20 Sale, 500 units @ \$90 June 25 Purchase 250 units @ \$70

Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?

(Points : 6)

\$61,700
\$60,300
\$58,500
\$31,100

22.Corresponds to CLO 6(b)
The following is a record of Meyer Corporation's inventory transactions for the current month:

 October 1 Balance, 500 units @ \$24 each October 9 Sale, 500 units @ \$51 October 12 Purchase 900 units @ \$26 each October 19 Sale, 800 units @ \$51 October 25 Purchase 600 units @ \$27 each

Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?

(Points : 6)

\$18,900
\$16,800
\$34,600
\$17,200

23.Corresponds to CLO 6(c)
The following is a record of Tiller Corporation's inventory transactions for the current month:

 January 1 Balance, 500 units @ \$10 each January 5 Sale, 290 units @ \$25 January 11 Purchase, 300 units @ \$12 each January 13 Sale, 250 units @ \$25 January 23 Purchase, 400 units @ \$13 each January 27 Sale, 310 units @ \$25

Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the cost of goods sold for the month of January?

(Points : 6)

\$14,004
\$9,775
\$4,085
\$4,025

24.Corresponds to CLO 6(d)
The following is a record of Caulder Corporation's inventory transactions for the current month:

 March 1 Balance, 500 units @ \$40 each March 12 Sale, 200 units @ \$85 March 16 Purchase, 300 units @ \$42 each March 22 Sale, 350 units @ \$85 March 28 Purchase, 300 units @ \$43 each

Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?

(Points : 6)

\$22,900
\$22,100
\$22,600
\$23,400

 25.Corresponds to CLO 7(a) In the context of dollar-value LIFO, when inventory in base year dollars increases, (Points : 6)

The LIFO reserve decreases
The LIFO price index increases
A LIFO layer is created
A LIFO layer is liquidated

26.Corresponds to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 450,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

 Date Inventory at Current Prices Current Price Index December 31, 2012 \$513,600 107 December 31, 2013 \$580,000 125 December 31, 2014 \$650,000 130

What is the ending inventory at December 31, 2012 under dollar-value LIFO?

(Points : 6)

\$464,000
\$464,980
\$482,100
\$497,080

 27.Corresponds to CLO 7(c) What is primary purpose of stating inventories at lower-of-cost-or-market? (Points : 6)

To report a loss when there is a decrease in the future utility below the original cost
To be conservative
To report a loss whenever there is a decrease in the future utility
To permit future profits to be recognized

 28.Corresponds to CLO 7(d) If the historical cost of product X is \$64, the selling price of product X is \$90, the costs to sell product X are \$14, the replacement cost for product X is \$55, and the normal profit margin is 30% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison? (Points : 6)

\$64
\$49
\$76
\$55

29.Corresponds to CLO 8(a)
Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 40%. The following information is available:

 Inventory, November 1 \$500,000 Purchases during November \$650,000 Sales during November \$900,000

The estimated cost of inventory at November 30 is

(Points : 6)

\$360,000
\$540,000
\$610,000
\$650,000

 30.Corresponds to CLO 8(b) Which of the following is not a basic assumption of the gross profit method of estimating inventory? (Points : 6)

The beginning inventory plus the purchases equal total goods to be accounted for.
Goods not sold must be on hand.
The sales, reduced to cost, deducted from the sum of the opening inventory plus purchases, equal ending inventory.
The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.

31.Corresponds to CLO 8(c)
Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:

 Cost Retail Beginning Inventory \$30,000 \$50,000 Purchases \$180,000 \$250,000 Freight-In \$2,500 ---- Net Markups \$8,500 Net Markdowns \$10,000 Employee Discounts \$1,000 Sales \$205,000

What is the cost to retail ratio?

(Points : 6)

68.88%
68.07%
70.35%
70.83%

32.Corresponds to CLO 8(d)
Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:

 Cost Retail Beginning Inventory \$300,000 \$420,000 Purchases \$1,450,000 \$2,000,000 Net Markups \$80,000 Net Markdowns \$30,000 Sales \$1,900,000

Capital City determines that the cost-to-retail ratio is 70%. What is the ending inventory at cost?

(Points : 6)

\$520,000
\$399,000
\$300,000
\$570,000

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