When a company uses the periodic inventory system, which of the following is true?

Cost of goods sold is computed at the end of the accounting period rather than at each sale date

Inventory purchases are recorded as a debit to Cost of Goods Sold.

The inventory account is updated throughout the year as each sale is made.

The inventory account is updated throughout the year as purchases are made.

Which of the following statements is correct when inventory unit costs are increasing?

FIFO will result in higher net income and a higher inventory valuation than will LIFO.

LIFO will result in lower net income and a higher inventory valuation than will FIFO

LIFO will result in higher net income and lower inventory valuation than will FIFO

FIFO will result in lower net income and a lower inventory valuation than will LIFO

Abel Company must write down its inventory by $30,000 to the net realizable value of $450.000 at December 31, 2019. What is the effect of this write-down on the year 2019 financial statements?

Decrease ending inventory on the balance sheet

Which of the following would not be classified as property, plant, and equipment on a balance sheet?

Equipment used in the manufacturing process

A building used as corporate headquarters

Smith Comp exchanges assets to acquire a building. The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000 Which of the following journal entries is correct for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for the building

Building: $370,000 debited Cash: $20,000 credited Common stock: $100,000 credited Additional paid-in capital: $250,000 credited

Building: $270,000 debited Cash: $20,000 credited Common stock: $100,000 credited Additional paid-in capital: $150,000 credited

Building: $370,000 debited Cash: $20,000 credited Common stock: $350,000 credited

Building: 370,000 debited Common stock: $370,000 credited

Which of the following statements is incorrect?

Expenditures for fixed assets decrease assets.

Ordinary repairs and maintenance decrease net income.

Ordinary repairs and maintenance are recurring in nature

Additions and improvements to a depreciable asset occur infrequently.

Which method of depreciation results in periodic depreciation expense that fluctuates from one period to the next, not necessarily in a steadily upward or downward direction?

Modified accelerated cost recovery system

37/Hill Inc. purchased an asset on January 1, 2019. Hill chose the double-declining balance depreciation method to depreciate the asset. Compared to the double-declining balance method. which of the following is correct if Hill would have chosen the straight-line depreciation method instead?

Depreciation expense would have been lower in 2019.

The book value of the asset would have been lower at the end of 2019.

Net income would have been lower during 2019.

The accumulated depreciation balance would have been higher at the end of 2019

Which of the following would most likely not be recorded as ordinary repairs and maintenance?

Putting a hydraulic lift on a delivery truck, making it easier and quicker to deliver appliances.

Fixing a tear in the carpet in the sales department offices.

Painting the exterior of the factory building.

43) A company sells a product FOB destination. The product is shipped on December 29, 2018 and the customer receives the shipment on January 3, 2019. Which of the following is true?

The sale will be recorded in 2019.

The sale will be recorded when the customer's credit card information is received.

The sale will be recorded in 2018.

The sale will be recorded when it is known there will be no returns or allowances.

Which of the following journal entries correctly records the write off of an uncollectible account receivable?

Allowance for doubtful accounts: debited Accounts receivable: credited

Bad debt expense: debited Uncollectible sales: credited

Allowance for doubtful accounts: debited Bad debt expense: credited

Bad debt expense: debited Allowance for doubtful accounts: credited

Which of the following journal entries correctly records the collection of an account reccivable for which a 1% sales discount was recorded at the time of collection?

Cash: debited Sales discounts: debited Accounts receivable: credited

Cash: debited Bad debt expense: debited Accounts receivable: credited

Cash: debited Sales discount: credited Accounts receivable: credited

Cash: debited Gross profit: credited Accounts receivable: credited

Which of the following accounts is not a contra-revenue account?

Allowance for doubtful accounts

Which of the following statements is correct?

The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to allowance for doubtful accounts

The journal entry to record bad debt expense requires a debit to bad debt expense and a credit ta accounts receivable

The journal entry to record the write-off of an uncollectible account receivable requires a debit to bad debt expense and a credit to accounts receivable.

The journal entry to record the write-off of an uncollectible account receivable requires a debit to bad debt expense and a credit to allowance for doubtful accounts.

Merchandise was sold on credit for $10,000. terms 2/10. n/30. Which of the following journal entry descriptions correctly describes the cash collection?

Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is after the discount period.

Cash is debited for $10,000 and accounts receivabic is credited for $10.000 if the collection is within the discount period.

Cash is debited for $10,000, accounts receivable is credited for $9.800, and sales discounts is credited for S200 if the collection is within the discount period$

Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is after the discount period

Accounting 1 Exam 2

Authored by kieran shah

Social Studies

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MULTIPLE CHOICE QUESTION

30 mins • 1 pt

The FIFO Inventory method will result in the lowest net income in comparison with the LIFO method when costs are decreasing

True

False

MULTIPLE CHOICE QUESTION

30 mins • 1 pt

During periods of increasing unit costs, the LIFO inventory method results in lower income tax expense

True

False

MULTIPLE CHOICE QUESTION

30 mins • 1 pt

The FIFO inventory method allocated the earliest inventory purchase costs to ending inventory

True

False

MULTIPLE CHOICE QUESTION

30 mins • 1 pt

The journal entry to write down inventory under the lower of cost or net realizable value rule results in a decrease in both ending inventory and cost of goods sold

True

False

MULTIPLE CHOICE QUESTION

30 mins • 1 pt

The average days to sell inventory decreases as inventory turnover increases

True

False

MULTIPLE CHOICE QUESTION

30 mins • 1 pt

Goods available for sale are allocated to both ending inventory and cost of goods sold

True

False

MULTIPLE CHOICE QUESTION

20 mins • 1 pt

An expenditure is capitalized when it is reported as an expense on the income statement

True

False

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Accounting 1 Exam 2

The FIFO Inventory method will result in the lowest net income in comparison with the LIFO method when costs are decreasing

During periods of increasing unit costs, the LIFO inventory method results in lower income tax expense

The FIFO inventory method allocated the earliest inventory purchase costs to ending inventory

The journal entry to write down inventory under the lower of cost or net realizable value rule results in a decrease in both ending inventory and cost of goods sold

The average days to sell inventory decreases as inventory turnover increases

Goods available for sale are allocated to both ending inventory and cost of goods sold

An expenditure is capitalized when it is reported as an expense on the income statement

If a second-hand machine is purchased for productive use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its productive use should be reported as part of the asset's cost on the balance sheet

Ordinary repairs and maintenance costs are incurred to maintain a fixed asset and are expensed as incurred

Depreciation is the process of estimating a fixed asset's current market value

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