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"Dinner is ready when the smoke alarm goes off" - Rabaxter

Acct 220 Week 2 Quiz –

  • Date Submitted: 08/18/2016 02:23 AM
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Quiz 2

1. One advantage to using a perpetual inventory system is that the company never has to physically count the inventory.


2. The weighted-average inventory method will likely result in neither the highest nor the lowest ending inventory.


3. When calculating accounts receivable turnover, a company would prefer a higher number rather than a lower number (within reason).

A lower number means that the customers are paying their debts easily hence low probability of incurring bad debts

4. When performing a bank reconciliation, checks outstanding are added back to the bank balance.


5. Usually the quick ratio will be a lower number than the current ratio.


Multiple Choice

6. The bad-debt method that uses the accounts receivable aging report is _______________.

b.   the percentage-of-receivables method

7. When it is determined that too much money has been set aside for uncollectible accounts, we will _______________.

d.   credit reserve for uncollectible accounts

8. A customer whose account was previously written off unexpectedly pays us. If we are using the allowance method we would _______________.

d. debit cash and credit bad-debt expense

9. When a retailer accepts a bank card (VISA or MasterCard), they will make what entry for the day’s receipts?

C .debit cash and credit sales

10. The company prepares, but does not yet pay, its first payroll of the new year. Salaries total $10,000 and 7.65% is withheld from paychecks for FICA tax. Ignore all other payroll deductions. The journal entries will be _______________.

A .debit wage expense $10,000 and credit wages payable $10,000; debit payroll tax expense for $765 and credit FICA tax payable $765

11. A company buys a $10,000...


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