ACCT 201A Exam 2 comprehensive
Questions and Answers with Verified
Solutions
Question 1:
ACME Company on June 15 sells merchandise on account to Beta Co.
for $5,000, terms 3/15, n/45. On June 30, Beta Co. returns merchandise
worth $1,500 to ACME Company. and paid the balance due. What is the
amount of cash ACME received?
Answer:
$3,395
Question 2:
A company returned goods for credit to the supplier. Which one of the
following is a portion of the journal entry required if a perpetual inventory
system is used?
Answer:
Credit Inventory
Question 3:
A company sells item on account with credit terms of 2/10, n/20. What is
the meaning of these terms?
Answer:
A 2 percent cash discount may be taken if payment is made within 10
days of the invoice date; otherwise the full amount is due within 20 days.
, Question 4:
A company uses LIFO to cost its inventory. Which statement is true?
Answer:
The company will pay less income taxes in periods of rising prices
compared to using FIFO.
Question 5:
A debit balance in the Allowance for Doubtful Accounts
Answer:
indicates that actual bad debt write-offs have exceeded previous
provisions for bad debts.
Question 6:
The trial balance of Priority Paints at December 31, 2014, includes the
following: Accounts Receivable (Debit: $94,000) Allowance for Doubtful
Accounts (Debit: $500) Sales (all on credit) (Credit: $550,000)
Answer:
A credit to the Allowance for Doubtful Accounts of $1,568.
Question 7:
Advantage Company's ending inventory is overstated by $2,000. What is
the effect of this error on the current year's cost of goods sold and net
income, respectively?
Answer:
Understated and overstated
Questions and Answers with Verified
Solutions
Question 1:
ACME Company on June 15 sells merchandise on account to Beta Co.
for $5,000, terms 3/15, n/45. On June 30, Beta Co. returns merchandise
worth $1,500 to ACME Company. and paid the balance due. What is the
amount of cash ACME received?
Answer:
$3,395
Question 2:
A company returned goods for credit to the supplier. Which one of the
following is a portion of the journal entry required if a perpetual inventory
system is used?
Answer:
Credit Inventory
Question 3:
A company sells item on account with credit terms of 2/10, n/20. What is
the meaning of these terms?
Answer:
A 2 percent cash discount may be taken if payment is made within 10
days of the invoice date; otherwise the full amount is due within 20 days.
, Question 4:
A company uses LIFO to cost its inventory. Which statement is true?
Answer:
The company will pay less income taxes in periods of rising prices
compared to using FIFO.
Question 5:
A debit balance in the Allowance for Doubtful Accounts
Answer:
indicates that actual bad debt write-offs have exceeded previous
provisions for bad debts.
Question 6:
The trial balance of Priority Paints at December 31, 2014, includes the
following: Accounts Receivable (Debit: $94,000) Allowance for Doubtful
Accounts (Debit: $500) Sales (all on credit) (Credit: $550,000)
Answer:
A credit to the Allowance for Doubtful Accounts of $1,568.
Question 7:
Advantage Company's ending inventory is overstated by $2,000. What is
the effect of this error on the current year's cost of goods sold and net
income, respectively?
Answer:
Understated and overstated
