Financial Accounting- Review For Test #2

When writing off a bad debt using the direct write-off method, what would you debit?

Bad Debt Expense

When writing off a bad debt when using the allowance method, what would you debit?

Allowance for Doubtful Accounts

What are the receivables?

Accounts, Notes, Interest

What type of receivable requires an executed promissory note?

notes

What receivable charges interest?

Notes

Cellermans reported sales of $2,500,000. Its gross profit as $700,000. What is the COGS?

1,800,000

If title to merchandise purchases passes to the buyer when the goods are shipped, the terms are

FOB Shipping Point

If title to merchandise purchases passes to the buyer when the goods arrive, the terms are

FOB Destination

Under the perpetual inventory system, the sale of merchandise requires how many journal entries

2

Under the perpetual inventory system, what are 2 accounts debited when merchandise is sold?

Cash; COGS

Under the perpetual inventory system, what are 2 accounts credited when merchandise is sold?

Sales Revenue; Inventory

Under the perpetual inventory system, what is the journal entry for cash paid for inventory?

Debit Inventory; Credit Cash

What is the method of accounting for uncollectible receivables not accepted by GAAP?

Direct Write-Off

What are the two methods of accounting for uncollectible receivables?

Direct Write-Off and Allowance for Doubtful Accounts

Under the perpetual inventory system

accounting records continuously update inventory

100 Units of Model A have a cost/unit of $140. MV/unit of $125. What is total cost?

14,000

100 Units of Model A have a cost/unit of $140. MV/unit of $125. What is total market value?

$12,500

100 Units of Model A have a cost/unit of $140. MV/unit of $125. What is reported under LCM?

$12,500

The weighted average cost method will always yield results between _________ and ________

FIFO and LIFO

Which inventory method should be used for relatively small number of unique, high-cost items?

Specific Identification

Ending inventory is made up of the oldest purchases when a company uses

LIFO

What is a method used to estimate uncollectible accounts?

Percentage of Sales

The two methods to estimate uncollectibles are

Percentage of Sales and Analysis of Receivables

What are elements of internal control?

risk assessment, monitoring, information and communication

The objectives of internal control are to

safeguard assets, comply with laws, provide accurate info

The debit balance in Cash Short and Over at the end of an accounting period is reported as

an expense on the income statement

Journal entries based on the bank reconciliation are required in the company's accounts for

book errors

The amount of the outstanding checks is included on the bank reconciliation as a(n)

deduction from the balance per bank statement

Where are Receivables reported on the Balance Sheet?

Assets section

Analysis of A/R shows $650 uncollectible. Allow for DA has a $110 credit. What is the JE amount.

$540

Calculation of FIFO

https://www.carboncollective.co/sustainable-investing/fifo-method#:~:text=In%20finance%2C%20the%20FIFO%20calculation%20assumes%20two%20things%3A,last%20were%20the%20ones%20that%20were%20sold%20last.

Calculation of LIFO

https://www.freshbooks.com/hub/accounting/calculate-fifo-and-lifo#howdoyoucalculatelifo

Calculation of LCM

https://www.accountingtools.com/articles/lower-of-cost-or-market-lcm