ACCT 200: Exam 2 Review

Humpty Dumpty's Hobbies Company has an allowance for Doubtful Accounts account with a $200 debit balance. Credit sales for the period were $60,000. an aging of accounts receivable schedule shows that $2,300 fo the accounts receivable will most likely be uncollectible. if the aging method is used to estimate uncollectible accounts, what is the dollar amount for the adjusting entry to record bad debt expense and what is the balance in allowance for bad debt after the adjusting entry is made? a. $2,500 adjusting entry amount; $2,300 credit balance b. $2,400 adjusting entry amount; $2,500 credit balance c. $2,300 adjusting entry amount; $2,700 debit balance d. $2,100 adjusting entry amount; $2,700 credit balance

a. $2,500 adjusting entry amount; $2,300 credit balance

which of the following statements are true assuming costs are increasing over time? a. the FIFO cost flow assumption will result in the largest net income. b. the LIFO cost flow assumption will result in the larges net income. c. the weighted average cost flow assumption will result in the largest income. d. net income is not affected by the cost flow assumption.

a. the FIFO cost flow assumption will result in the largest net income.

Tip Top Tool Company fails to make the year-end adjusting entry to accrue interest on a note receivable. This error will: a. understate net income, stockholders' equity, and total assets. b. overstate net income and stockholders' equity and understate total assets c. understate net income and stockholders' equity and overstate total liabilities d. overstate net income, stockholders' equity, and total assets.

a. understate net income, stockholders equity, and total assets.

which of the following assets would be "depleted"? a. equipment b. patents c. oil well d. land

c. Oil well

the lower-of-cost-or-market method is an example of what accounting principle? a. matching b. consistency c. conservatism d. going concern

c. conservatism

which of the following does not constitute a good internal control? a. use of equipment, reliable employees b. clear authorization of transactions c. performance of only internal audits d. separation of duties

c. performance of only internal audits.

Toys 'R Us wants to estimate its ending inventory based on the following data: beginning inventory of $50,000, sales of $350,000, purchases of $300,000, and a normal gross margin percentage of 20%. Using the gross margin method, the estimate of ending inventory is: a. $12,000 b. $24,000 c. $40,000 d. $70,000

d. $70,000

which of the following is not included in cost of an acquired piece of land? a. tearing down a useless shack on the property b. leveling the site c. building a sewer system d. building a security fence

d. building a security fence