1. Mid-Term review part 2 2014

2. #1 Classify Sales Discounts a.Assets, debit b.Contra Revenue, credit c.Contra Revenue, debit d.Cost of merchandise, debit

3. #2 When using the aging method to estimate bad debts, as the account ages the a.The % estimated to be bad goes down b.The % estimated to be bad goes up c.The % estimated to be bad stays the same

4. #3 When adjusting the merchandise inventory balance at the end of the fiscal year the entry might be a. Debit merchandise inventory, credit sales b. Debit merchandise inventory, credit income summary. c.Debit Income summary, credit cost of goods

5. #4 The best time to take a physical inventory would be when inventory A.Is highest B.Any time, when staff is available C.Is lowest

6. #5 The change fund would be used for ◦A. paying for incidental costs of running the business, i.e. lunch for a last minute business meeting. ◦B. Making change for cash purchases at the register ◦C. There is no such thing.

7. #6 The entry to establish a petty cash account is A.debit cash, credit petty cash B.Debit petty cash, credit change fund C.Debit petty cash, credit cash

8. #7 You sold merchandise valued at $500 on account with the terms of 2/10, n/15. What is the entry for the transaction? A.Debit acct receivable - $490, debit sales discount - $10, credit sales $500, B.Debit cash – 490, debit sales discount -$10, credit sales, $500. C.Debit acct receivable $500, credit sales $500

9. #8 A marketable security would normally be kept for A.12 months or less B.Over 12 months C.Between 3-5 years

10. Use the information provided to answer the following 2 questions: Change fund has $50. cash sales for the day are $800, sales tax for the day is $48. The cash in the drawer at the end of the day is… $888.

11. #9 How much cash did you receive in total from the customers today? A. $848 B. $750 C.$802

12. #10 Was the drawer short or over today? a. Over b. Short c. Neither

13. #11 If the drawer were over, would you debit or credit cash short and over? a.Debit b.Credit

14. #12 When using the allowance method for uncollectible accounts, what is the adjusting entry? A. Debit allowance for bad debts, credit bad debts expense B. Debit bad debt expense, credit allowance for bad debts C. Debit bad debt expense, credit accounts receivable.

15. #13 When estimating the amount of bad debts for a company, which of the following methods will require you to consider the current balance in the allowance account? ◦A. % of net sales ◦B. Aging of bad debts

16. #14 If one of your customers is unable to pay their account to you in a timely fashion, you might give them the option of this ◦A. Note receivable ◦B. Note payable ◦C. Note receivable discounted

17. #15 What is the due date for a note dated today and due in 45 days? A. March 31 B. April 4 C. April 5

18. #16 A note dated January 31 and due in 3 months would be due ◦A. February 28 ◦B. March 30 ◦C. April 30 ◦D. April 31

19. #17 Calculate the maturity value of this note…. Principal $550, interest rate is 4%, term is 30 days A. $551.81 B. $1.83 C. $1.81 D. $551.83

20. #18 The bank has just notified you that a note that you discounted with them has been paid. This is the entry you would make. A. Debit notes receivable, credit discounted notes receivable B. Debit notes receivable discounted, credit notes receivable. C. Debit notes receivable discounted, credit cash

21. #19 The terms are FOB destination – who pays the shipping. ◦A. The seller ◦B. The buyer ◦C. The customer ◦D. doesn’t matter

22. #20 Which inventory system is constantly updated? ◦A. Perpetual ◦B. Periodic

23. Using the inventory info below, answer the next couple questions. Beginning inventory 10$10.00 Purchase 2/1015$12.50 Purchase 3/1020$7.50

24. #21 If 9 units are left and you use the LIFO method, the ending inventory value would be A. $90 B. $67.50 C. $112.50

25. #22 If the weighted average method is used, what’s the ending inventory value (9 left)? A.$90 B. $67.50 C. $87.48 D. $9.72

26. #23 When you exchange assets, you record A. Both gains and losses B. Only gains C. Only losses

27. #24 You calculated the book value of an asset by A. Asset cost – annual depreciation B. Asset cost – accumulated depreciation C. Asset cost + accumulated depreciation D. Asset cost + annual depreciation

28. #25 Asset cost was $25,000, salvage value $100, and the life is 5 years. The asset was purchased on March 10, what is the depreciation for the first year? A. $4,980 B. $4150 C.$ 830

29. #26 Using the information from the previous question, but the declining balance method… what is the depreciation for the first year? A. $10,000 B.$9,960 C. $8,333

30. #27 Using the information from question #25, calculate the first year depreciation using the sum-of-the years digits. A.$8,333.33 B.$8,300 C.$6,917