Question: If a seller receives cash before the appropriate time to recognize revenue, the seller should treat the consideration as a liability.
Answer Choices:
Answer:\nTrue
Question: Cash equivalents are short-term, highly liquid investments with original maturities of one year or less.
Answer Choices:
Answer:\nFalse
Question: PPC, Inc. enters into an arrangement with Malone Enterprises by which Malone will purchase $105,500 of PPC’s receivables and charge a 5% fee. As part of the agreement, Malone will hold back $9,300 as additional security. PPC sold the receivable with recourse, and the estimated recourse liability is $2,700. Prepare the journal entry to record the agreement assuming that the transaction qualifies as a sale for PPC.
Answer Choices:
Answer:\nDebit Cash 90,925 Debit Due from Factor 9,300 Debit Loss on Sale of Receivables 7,975 Credit Recourse Liability 2,700 Credit Accounts Receivable 105,500
Question: A company uses the conventional retail method to estimate the cost of ending inventory for interim financial statements. Which of the following responses describe the correct treatment of markups and markup cancellations in the calculation of the cost-to-retail ratio?
Answer Choices:\n\nA. Markups subtract / Markup Cancellations exclude B. Markups add / Markup Cancellations exclude C. Markups add / Markup Cancellations add D. Markups add / Markup Cancellations subtract
Answer:\nD
Question: Under the completed-contract method, the firm only reports profit in the final year of the contract.
Answer Choices:
Answer:\nTrue
Question: Which one of the following approaches is not a method for allocating a transaction price to multiple performance obligations?
Answer Choices:\n\nA. present cost basis B. expected-cost-plus-a-margin C. residual D. adjusted market assessment
Answer:\nA
Question: The following company information is available: (average A/R, average inventories, etc.) What is the company’s inventory turnover ratio?
Answer Choices:
Answer:\n13.3
Question: Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are)
Answer Choices:\n\nA. debit Cash and credit Sales Revenue B. debit Accounts Receivable and credit Sales Revenue C. debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory D. debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory
Answer:\nB
Question: Goods and services are transferred over time if the customer controls the asset as the seller creates it or enhances it over time.
Answer Choices:
Answer:\nTrue
Question: At December 31, the Wendy Company has ending inventory with a historical cost of $633,000 valued using FIFO. The net realizable value of the inventory is $617,000. … Following U.S. GAAP, which journal entry is required on December 31 to adjust the ending balance of inventory if the indirect method is used?
Answer Choices:\n\nA. Debit Cost of Goods Sold for $34,000 and credit Inventory for $34,000 B. Debit Cost of Goods Sold for $16,000 and credit Inventory for $16,000 C. Debit Inventory for $34,000 and credit Cost of Goods Sold for $34,000 D. Debit Loss on Inventory Writedown for $16,000 and credit Allowance to Reduce Inventory to Market for $16,000
Answer:\nB
Question: On June 1, Johnson Company purchased $7,000 of inventory on account from Schmid Company on June 1. Schmid Company offers a 4% discount if payment is received within 15 days. Johnson Company records the purchase using the net method and the perpetual inventory system. Johnson Company paid for the inventory on June 30. The journal entry on June 30 by Johnson Company includes
Answer Choices:\n\nA. a debit to Accounts Payable for $6,720 B. a credit to Cash for $6,720 C. a credit to Interest Expense for $280 D. a debit to Accounts Payable for $7,000
Answer:\nA
Question: Net realizable value (NRV) describes the estimated amount of a company’s expected cost of uncollectible accounts.
Answer Choices:
Answer:\nFalse
Question: Dolt Computer Consultants (DCC) signed a contract … DCC uses the percentage-of-completion method. Compute the percentage completed, gross profit recognized, and the amount of the revenue recorded in 2022.
Answer Choices:
Answer:\nPercentage complete: 30% Gross profit recognized (2022): $9,000 Revenue recognized in 2022: $25,800
Question: Recognition of revenue as each performance obligation is satisfied is which step in the recognition process?
Answer Choices:
Answer:\n5th
Question: A consignment sale is an example of a principal-agent arrangement.
Answer Choices:
Answer:\nTrue