ACCT 201A Exam 2 Hoffman

Snow Company has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20 Purchase 800 4.25 Sep.8 Purchase 400 4.50 Assuming Snow sells 1,000 units, calculate ending inventory under FIFO. $1,650. $1,800. $4,200. $4,350.

$1,800.

The Open Grill incurred the following costs in acquiring a new piece of land: Cost of the land$80,000 Commissions 4,800 Liability insurance for the first year 1,200 Cost of removing existing building 20,000 Sale of salvaged materials (4,000) Total costs$102,000 What is the total recorded cost of the land? $102,000. $100,800. $106,000. $80,000.

$100,800.

At the beginning of the year, Bennett Supply has inventory of $3,500. During the year, the company purchases an additional $12,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $4,000. What amount will Bennett report for cost of goods sold? $11,000. $11,500. $12,000. $12,500.

$11,500.

A company purchased land and building from a seller for $900,000. A separate appraisal reveals the fair value of the land to be $200,000 and the fair value of the building to be $800,000. For what amount would the company record land at the time of purchase? $900,000. $200,000. $180,000. $220,000.

$180,000.

A local Starbucks sells gift cards of $10,000 during the year. By the end of the year, customers have redeemed $8,000 of gift cards. What will be the year-end balance in the Deferred Revenue account? $0. $2,000. $8,000. $10,000.

$2,000.

On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20X2 (one year later). Assuming Nelson Inc. has a December 31 year-end, on March 31, 20X2, Nelson Inc. will record interest revenue of: $8,000. $6,000. $2,000. $0.

$2,000.

Maxwell Corporation has the following inventory information at the end of the year: InventoryQuantity Unit Cost Unit NRV Item A 20 $20 $35 Item B 50 30 25 Item C 40 10 15 Using the lower of cost and net realizable method, for what amount would Maxwell report ending inventory? $2,050. $2,300. $2,550. $2,800.

$2,050.

Madison Outlet has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total sales to customers 12 What amount would Madison report for ending inventory using weighted-average cost? $3,380. $3,250. $3,120. $3,000.

$3,380.

Snow Company has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20 Purchase 800 4.25 Sep.8 Purchase 400 4.50 Assuming Snow sells 1,000 units, calculate cost of goods sold under LIFO. $1,650. $1,800. $4,200. $4,350.

$4,350.

On October 1, a franchise was purchased for $2,000,000. The franchise agreement is for 10 years. What is the amount of amortization expense by the end of the first year, December 31 (using partial year straight-line amortization)? (Do not round intermediate calculations.) $0. $50,000. $200,000. $100,000.

$50,000.

The Cheese Factory incurred the following costs related to acquiring a new piece of equipment: Cost of the equipment$50,000 Sales tax (8%) 4,000 Shipping 3,000 Installation 2,000 Depreciation during the first month 1,000 Total costs$60,000 What is the total recorded cost of the equipment? $60,000. $50,000. $57,000. $59,000.

$59,000.

On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20X2 (one year later). On December 31, 20X1, Nelsen will accrue interest revenue of: $8,000. $6,000. $2,000. $0.

$6,000.

On December 31, the Accounts Receivable ending balance is $80,000. Assume that the unadjusted balance of Allowance for Uncollectible Accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be: $5,000. $5,100. $5,600. $6,100.

$6,100.

The original cost of a piece of equipment was $100,000. The equipment was depreciated using the straight-line method with annual depreciation of $20,000. After two years, the fair value of the equipment is $82,000. How much is the book value of the equipment at the end of the second year? $100,000. $82,000. $80,000. $60,000.

$60,000.

Bryer Co. purchases all of the assets and liabilities of Stellar Co. for $1,500,000. The fair value of Stellar's assets is $2,000,000, and its liabilities have a fair value of $1,200,000. The book value of Stellar's assets and liabilities are not known. For what amount would Bryer record goodwill associated with the purchase? $800,000. $500,000. $700,000. $0.

$700,000.

Equipment was purchased for $50,000. At that time, the equipment was expected to be used eight years and have a residual value of $10,000. The company uses straight-line depreciation. At the beginning of the third year, the company changed its estimated useful life to a total of six years (four years remaining) and the residual value to $8,000. What is depreciation expense in the third year? $8,000. $5,000. $7,000. $5,500.

$8,000.

Use the information below to calculate net revenues. Service Revenue$100,000 Sales Discounts$2,000 Accounts Receivable$15,000 Sales Allowances$7,000 Cash$18,000 $91,000. $85,000. $68,000. $98,000.

$91,000. (Don't include cash or account receivable both assets)

Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is $3,800. The net amount of accounts receivable is: $96,000. $96,200. $100,000. $104,000.

$96,000.

A company has the following account balances at the end of the year: Credit Sales = $400,000 Accounts receivable = $80,000 Allowance for Uncollectible Accounts = $400 credit The company estimates 1% of credit sales will be uncollectible. At what amount would Allowance for Uncollectible Accounts be reported in the current year's balance sheet? $4,000. $4,400. $3,600. $800.

4400

Which of following best describes a merchandising company? A company whose revenues exceed expenses. A company that produces products from raw materials, labor, and overhead. A company that provides services to its customers. A company that purchases products that are primarily in finished form for resale to customers.

A company that purchases products that are primarily in finished form for resale to customers.

Accumulated depreciation is: An expense account. An asset. A contra-asset. A liability.

A contra-asset.

The entry to record the estimate for uncollectible accounts includes: A debit to Allowance for Uncollectible Accounts. A credit to Accounts Receivable. A debit to Sales Revenue. A debit to Bad Debt Expense.

A debit to Bad Debt Expense.

When a customer pays in advance for a product or service, the advance payment received by the company is recorded as: A debit to an asset and a credit to a liability account. A debit to a revenue and a credit to an asset account. A debit to an asset and a credit to a revenue account. A debit to a liability and a credit to a revenue account.

A debit to an asset and a credit to a liability account.

Equipment originally costing $100,000 has accumulated depreciation of $65,000. If it is sold for $40,000, the company should record: A loss of $5,000. A gain of $5,000. A loss of $70,000. A gain of $70,000.

A gain of $5,000.

Equipment originally costing $65,000 has accumulated depreciation of $25,000. If the equipment is sold for $30,000, the company should record: No gain or loss. A loss of $10,000. A gain of $10,000. A loss of $35,000.

A loss of $10,000.

Equipment originally costing $95,000 has accumulated depreciation of $30,000. If the equipment is sold for $55,000, the company should record No gain or loss. A gain of $10,000. A loss of $10,000. A loss of $40,000.

A loss of $10,000.

The effect of writing off a specific account receivable is: A reduction in the Allowance for Uncollectible Accounts. An increase in the amount of Accounts Receivable. An increase in the amount of Bad Debt Expense. An increase in the Allowance for Uncollectible Accounts.

A reduction in the Allowance for Uncollectible Accounts.

If equipment is retired, which of the following accounts would be debited? Accumulated depreciation. Depreciation expense. Equipment. Cash.

Accumulated depreciation.

Fan Company sells inventory on account. The entry or entries to record this sale using a perpetual inventory system would include a: Debit to Accounts Receivable. Credit to Sales Revenue Debit to Cost of Goods Sold. All of the these are included to record the sale.

All of the these are included to record the sale.

Which of the following represents a characteristic of a liability? A probable future sacrifice of economic benefits. Arising from present obligations to other entities. Resulting from past transactions or events. All of these are characteristics of a liability.

All of these are characteristics of a liability.

Net income is defined as: All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Gross Profit minus Operating Expenses. Income before Income Tax Expense.

All revenues minus all expenses.

Which of the following is not a current liability? Notes payable due in six months. Current portion of long-term debt. An unused line of credit. Deferred revenue to be earned in nine months.

An unused line of credit.

Accounts receivable are best described as Liabilities of the company that represent the amount owed to suppliers. Amounts that have previously been received from customers. Assets of the company representing the amount owed by customers. Amounts that have previously been paid to suppliers.

Assets of the company representing the amount owed by customers.

The asset's cost less accumulated depreciation is called: Replacement cost. Book value. Net fair value. Residual value.

Book value.

Which of following companies record revenues when selling inventory? Service companies. Manufacturing companies. Merchandising companies. Both manufacturing and merchandising companies.

Both manufacturing and merchandising companies.

The acid-test ratio is Current assets divided by current liabilities. Cash and current investments divided by current liabilities. Cash, current investments, and accounts receivable divided by current liabilities. Cash, current investments, accounts receivable, and inventory divided by current liabilities.

Cash, current investments, and accounts receivable divided by current liabilities.

Under a perpetual inventory system: Cost of good sold is recorded with a period-end adjusting entry. Purchase discounts are not recorded. Inventory purchases are recorded only at the end of the period. Cost of goods sold is recorded with each sale.

Cost of goods sold is recorded with each sale.

A long-term asset is recorded at the: Cost of the asset. Additional costs to get the asset ready for use. Cost of the asset plus all costs necessary to the asset ready for use. Cost of the asset less all costs necessary to the asset ready for use.

Cost of the asset plus all costs necessary to the asset ready for use.

The current ratio is: Current assets divided by current liabilities. Current liabilities divided by current assets. Cash, short-term investments, and accounts receivable divided by current liabilities. Cash, short-term investments, accounts receivable, and inventory divided by current liabilities.

Current assets divided by current liabilities.

Which of the following is reported as a current liability? Notes payable due in two years. Notes payable due in 15 months. Current portion of long-term debt. Unused line of credit.

Current portion of long-term debt.

Using a perpetual inventory system, the purchase of inventory on account would be recorded as Debit Cost of Goods Sold; credit Inventory. Debit Inventory; credit Sales Revenue. Debit Purchases; credit Accounts Payable. Debit Inventory; credit Accounts Payable.

Debit Inventory; credit Accounts Payable.

On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25? Debit Cash for $500. Credit Accounts Receivable for $490. Credit Service Revenue for $500. Debit Sales Discount for $10.

Debit Sales Discount for $10.

On November 1, 20X1, a company signed a $200,000, 12%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 20X2. The company should report the following adjusting entry at December 31, 20X1: Debit interest expense and credit interest payable, $4,000. Debit interest expense and credit cash, $4,000. Debit interest expense and credit interest payable, $12,000. Debit interest expense and credit cash, $12,000.

Debit interest expense and credit interest payable, $4,000.

Management can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably possible, a contingent liability should be Disclosed but not reported as a liability. Disclosed and reported as a liability. Neither disclosed nor reported as a liability. Reported as a liability but not disclosed.

Disclosed but not reported as a liability.

Which of the following increases an employer's payroll costs? FICA withholding from the employee. State income tax. Federal income tax. Employer's FICA contribution.

Employer's FICA contribution.

Under the allowance method for uncollectible accounts, the balance of Allowance for Uncollectible Accounts increases when: Future bad debts are estimated. Bad debts actually occur. Cash is received from customers. Never.

Future bad debts are estimated.

Which of the following intangible assets are not amortized? Goodwill. Patents. Copyrights. Franchises.

Goodwill.

Operating income is defined as: All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Gross Profit minus Operating Expenses. Income before Income Tax Expense.

Gross Profit minus Operating Expenses.

Which of the following is not included in calculating the acid-test ratio? Accounts receivable. Current investment in marketable securities. Accounts payable. Inventory

Inventory

Fan Company purchases inventory on account. The entry to record this purchase using a perpetual inventory system would include a debit to: Accounts Payable. Inventory. Cost of Goods Sold. Purchases.

Inventory.

Which inventory cost flow assumption generally results in the lowest reported amount for inventory when inventory costs are rising? Specific identification. First-in, first-out (FIFO). Last-in, first-out (LIFO). Average cost.

Last-in, first-out (LIFO).

Which of the following statements regarding liabilities is not true? Liabilities can be for services rather than cash. Liabilities are reported in the balance sheet for almost every business. Liabilities result from future transactions. Liabilities represent probable future sacrifices of benefits.

Liabilities result from future transactions.

Federal and state income taxes withheld by employers from their employees' payroll are initially recorded with a credit to a(n): Liability. Expense. Asset. Revenue.

Liability.

Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset's life? Short service life, high residual value, and straight-line depreciation. Long service life, high residual value, and straight-line depreciation. Short service life, low residual value, and double-declining-balance depreciation. Long service life, high residual value, and double-declining-balance depreciation.

Long service life, high residual value, and straight-line depreciation.

Current liabilities May include contingent liabilities. Include obligations payable within one year or one operating cycle, whichever is shorter. Can be satisfied only with the payment of cash. Are preferred by most companies over long-term liabilities.

May include contingent liabilities.

Using the allowance method, the effect on the current year's financial statements of writing off an account receivable generally is to Decrease total assets. Decrease net income.

Neither I nor II

If a company uses the allowance method of accounting for uncollectible accounts and writes off a specific account: Net accounts receivable increase. Net accounts receivable decrease. Net accounts receivable do not change. The effect on net account receivables depends on the relationship between the allowance account balance and the amount of the write off.

Net accounts receivable do not change.

Smith Co. filed suit against Western, Inc., seeking damages for patent infringement. Smith's legal counsel believes it is probable that Western will have to pay $125,000, although no final settlement has yet been reached. How should Smith report this litigation? As an asset for $125,000. As a gain for $125,000. As both an asset and a gain for $125,000. No asset or gain is reported.

No asset or gain is reported.

Assuming a current ratio of 1.00 and an acid-test ratio of 0.75, how will the purchase of inventory with cash affect each ratio? Increase the current ratio and increase the acid-test ratio. No change to the current ratio and decrease the acid-test ratio. Decrease the current ratio and decrease the acid-test ratio. Increase the current ratio and decrease the acid-test ratio.

No change to the current ratio and decrease the acid-test ratio.

Which of the following expenditures should be recorded as an expense? An addition which increases future benefit. An improvement. Ordinary repairs and maintenance. Successful legal defense of an intangible asset.

Ordinary repairs and maintenance.

An exclusive 20-year right to manufacture a product or to use a process is a: Patent. Copyright. Trademark. Franchise.

Patent.

Which of the following is not recorded as an intangible asset in the balance sheet? Patents. Research and development. Trademarks. Goodwill.

Research and development.

A multiple-step income statement provides the advantage of: Placing all revenues before all expenses. Separating revenues and expenses based on their different types of activities. Placing all revenues after all expenses. Excluding the effects of income taxes in the calculation of net income.

Separating revenues and expenses based on their different types of activities.

Which of the following will result in higher depreciation expense in the first year of the asset's life? Short service life and high residual value. Short service life and low residual value. Long service life and low residual value. Long service life and high residual value.

Short service life and low residual value.

Which of the following is true in comparing the current ratio with the acid-test ratio? Sometimes the current ratio will be larger and sometimes the acid-test ratio will be larger. The denominator in the ratios will differ. The current ratio will always be at least as large as the acid-test ratio. The acid-test ratio will always be at least as large as the current ratio.

The current ratio will always be at least as large as the acid-test ratio.

The amount of the gain on the sale of equipment equals: The selling price minus the book value of the equipment. The selling price minus the original cost of the equipment. The selling price minus the fair value of the equipment. The selling price minus accumulated depreciation of the equipment.

The selling price minus the book value of the equipment.

Which of the following statements is false regarding the amortization of intangible assets? Intangible assets with a limited useful life are amortized. The service life of an intangible asset is always equal to its legal life. The expected residual value of most intangible assets is zero. Goodwill is the most common intangible asset with an indefinite useful life.

The service life of an intangible asset is always equal to its legal life.

Suppose Windell Corporation understates its ending inventory amount. What effect will this have on the reported amount of net income in the year of the error? Overstate net income. Understate net income. Have no effect on net income. Not possible to determine with information given.

Understate net income.

Which of the following is not deducted from an employee's salary? FICA taxes. Unemployment taxes. Income taxes. Employee portion of insurance and retirement payments.

Unemployment taxes.

A sales discount is recorded by the seller as a(n): Expense. Contra asset. Contra revenue. Liability.

contra

In most cases, current liabilities are payable within ____ year(s), and long-term liabilities are payable more than ____ year(s) from now. one; two one; one two; two one; ten

one; one

Madison Outlet has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total sales to customers 12 What amount would Madison report for cost of goods sold using FIFO? $2,600. $2,900. $3,600. $3,900.

$2,600.

A company has the following account balances at the end of the year: Credit Sales = $400,000 Accounts receivable = $80,000 Allowance for Uncollectible Accounts = $400 debit The company estimates future uncollectible accounts to be 4% of accounts receivable. At what amount would Bad Debt Expense be reported in the current year's income statement? $400. $2,800. $3,200. $3,600.

$3,600.

Madison Outlet has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total sales to customers 12 What amount would Madison report for ending inventory using FIFO? $2,600. $2,900. $3,600. $3,900.

$3,900. (total cost-cogs)

Suppose the balance of the allowance for uncollectible accounts at the end of the current year is $800 (credit) before any adjustment entry. The company estimates future uncollectible accounts to be $5,600. At what amount would bad debt expense be reported in the current year's income statement? $800. $4,800. $5,600. $6,400.

$4,800.

On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10, n/30. Frederickson pays for the services on August 12. What is the amount of net revenues (total revenue minus sales discounts) as of August 12? $4,850. $5,000. $5,150. $5,300.

$4,850.

Pizza Shop sells toaster ovens with a one-year warranty to fix any defects. For the current year, 100 toaster ovens have been sold. By the end of the year 4 ovens have been fixed for an average of $80 each. Management estimates that 5 more of the 100 sold will need to be fixed next year for an estimated $80 each. For how much should Pizza Shop report warranty liability at the end of the current year? $400. $320. $720. $0.

$400.

If Executive Airways borrows $10 million on April 1, 20X1, for one year at 6% interest, how much interest expense does it record for the year ended December 31, 20X1? $300,000 $450,000 $150,000 $600,000

$450,000

On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10, n/30. Frederickson pays for the services on August 12. What amount would Sanders record as revenue on August 4? $4,850. $5,000. $5,150. $5,300.

$5,000.

On December 31, the Accounts Receivable ending balance is $80,000. Assume that the unadjusted balance of Allowance for Uncollectible Accounts is a credit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be: $5,000. $5,100. $5,600. $6,100.

$5,100.

At the end of its first year of operations, a company establishes an allowance for future uncollectible accounts for $5,600. At what amount would bad debt expense be reported in the current year's income statement? $800. $4,800. $5,600. $6,400.

$5,600.

Using a perpetual inventory system, the sale of inventory on account would be recorded as Debit Cost of Goods Sold; credit Inventory. Debit Inventory; credit Sales Revenue. Debit Accounts Receivable; credit Sales Revenue.

1 and 3

For the year, Sealy Incorporated reports net sales of $50,000, cost of goods sold of $40,000, and an average inventory balance of $5,000. What is Sealy's gross profit ratio? 20% 10% 25% 30%

20%

On May 1, 2021, Nees Manufacturing lends $10,000 to Roberson Supply using a 9% note due in 12 months. Nees has a December 31 year-end. Calculate the amount of interest revenue Nees will report in its 2021 and 2022 income statements. 2021 = $300; 2022 = $600. 2021 = $600; 2022 = $300. 2021 = $900; 2022 = $0. 2021 = $0; 2022 = $900.

2021 = $600; 2022 = $300.

When a company provides services on account, which of the following accounts is debited? Service Revenue. Accounts Payable. Accounts Receivable. Cash.

Accounts Receivable.

The allowance method for uncollectible accounts Is required by Generally Accepted Accounting Principles. Allows for the possibility that some accounts will not be collected. Reports net accounts receivable for the amount of cash expected to be collected. All of the answer choices are correct

All of the answer choices are correct

Which of the following expenditures should be recorded as an asset? An addition which increases future benefit. Repairs that maintain current benefits. Maintenance that maintain current benefits. Unsuccessful legal defense of an intangible asset.

An addition which increases future benefit.

Travel Planners, Inc. borrowed $5,000 from First State Bank and signed a promissory note. What entry should Travel Planners record? Debit Cash, $5,000; Credit Notes Receivable, $5,000. Debit Notes Receivable, $5,000; Credit Cash, $5,000. Debit Cash, $5,000; Credit Notes Payable, $5,000. Debit Notes Payable, $5,000; Credit Cash, $5,000.

Debit Cash, $5,000; Credit Notes Payable, $5,000.

Travel Planners, Inc. borrowed $5,000 from First State Bank and signed a promissory note. What entry should First State Bank record? Debit Cash, $5,000; Credit Notes Receivable, $5,000. Debit Notes Receivable, $5,000; Credit Cash, $5,000. Debit Cash, $5,000; Credit Notes Payable, $5,000. Debit Notes Payable, $5,000; Credit Cash, $5,000.

Debit Notes Receivable, $5,000; Credit Cash, $5,000.

The entry to write down inventory from cost to net realizable value at the end of the year includes a: Debit to Inventory. Credit to Sales Revenue. Debit to Cost of Goods Sold. Credit to Accounts Payable.

Debit to Cost of Goods Sold.

At the end of the year, Marline Corporation determines that its ending inventory has a cost of $2,000 and a net realizable value of $1,900. What would be the effect of the adjustment to write down inventory to net realizable value? Decrease in net income. Increase in net income. Increase in cost of ending inventory. No effect on net income or ending inventory.

Decrease in net income.

Which of the following correctly describes the nature of depreciation? Depreciation represents the valuation of property, plant, and equipment over its service life. Depreciation represents the valuation of an intangible asset over its service life. Depreciation represents the allocation of the cost of property, plant, and equipment over its service life. Depreciation represents the allocation of the cost of an intangible asset over its service life.

Depreciation represents the allocation of the cost of property, plant, and equipment over its service life.

Which of the following is paid by both the employee and the employer? FICA taxes. Federal unemployment taxes. State unemployment taxes. Personal income taxes.

FICA taxes.

Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs? LIFO. FIFO. Weighted-average. Income will be the same under each assumption.

FIFO

Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service? Sales Allowance. Sales Discount. Trade Discount. Allowance for Uncollectible Accounts.

Sales Allowance.

Gross profit is defined as: All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Sales Revenue minus Operating Expenses. Income before Income Tax Expense.

Sales Revenue minus Cost of Goods Sold.

The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as Sales tax expense. Sales tax revenue. Sales tax receivable. Sales tax payable.

Sales tax payable.

Which of the following represents the balance of Cost of Goods Sold at the end of the year? The cost of inventory not yet sold by the end of the year. The cost of inventory purchased during the year. The cost of inventory at the beginning of the year. The cost of inventory sold during the year.

The cost of inventory sold during the year.

If a company uses the allowance method of accounting for uncollectible accounts and collects cash on an account receivable previously written off: Total assets increase. Total assets decrease. There is no change in total assets. The change in total assets depends on the relationship between the allowance account balance and the amount of the collection.

There is no change in total assets.