Acct 2810 Miller Exam 2 Questions And Correct Answers.

ACCT 2810 MILLER EXAM 2 QUESTIONS
AND CORRECT ANSWERS
Question 1
periodic system
Correct Answer
Inventory records are updated "periodically".
-Inventory purchases recorded in "Purchases" account
-No entry to adjust inventory at point of sale
-Ending inventory count is used to determine COGS at the end of the period



Question 2
Percentage of receivables (aging)
Correct Answer
A balance sheet approach. Focus is on the estimate of the allowance (a contra asset)
to get the net realizable value of accounts receivable.



Question 3
Cost of Inventory
Correct Answer
Purchase price − purchase discounts + freight - purchase returns and allowances



Question 4
Notes Payable
Correct Answer
-More formal agreement. Interest is calculated.
-includes a maker and payee




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, Question 5
Days' Sales in Receivables
Correct Answer
365 days/accounts receivables turnover



Question 6
allowance method
Correct Answer
•Bad debts are estimated each period and a contra receivables account called
"Allowance for Bad Debts" is used.
-bad debt expense happens before the account is written off!



Question 7
bad debt expense
Correct Answer
Credit sales × Bad debts as a percent of credit sales



Question 8
percent of accounts receivable method
Correct Answer
Accounts receivable are analyzed based on an aging schedule. The bad debt
estimate represents the required ending balance that needs to be in the Allowance
for Bad Debts account.



Question 9
Inventory Turnover
Correct Answer
cost of goods sold/average inventory




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