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Question : 41. Both U.S. GAAP and IFRS require the allowance method for : 1230640

Accounting

 

 

41. Both U.S. GAAP and IFRS require the allowance method for uncollectible accounts, which involves estimating the amount of uncollectible accounts receivable associated with  
A. the cumulative total of all accounting period’s total sales.
B. the cumulative total of all accounting period’s credit sales.
C. each accounting period’s total sales.
D. each accounting period’s credit sales.
E. the cumulative total of all accounting period’s cash sales.

 

42. Bad Debt Expense is also called  
A. the Provision for Bad Debts and the Provision for Uncollectible Accounts
B. the Provision for Bad Debts, only
C. the Provision for Uncollectible Accounts, only
D. the direct write-off method, only
E. the indirect write-off method, only

 

43. Bad Debt Expense is also called the Provision for Bad Debts and the Provision for Uncollectible Accounts. Provision in this context refers to  
A. a liability in U.S. GAAP, not an expense; that provision in IFRS refers to an expense whose timing or amount, or both, are uncertain.
B. an expense in U.S. GAAP, not a liability; that provision in IFRS refers to an expense whose timing or amount, or both, are uncertain.
C. an liability in U.S. GAAP, not an expense; that provision in IFRS refers to a liability whose timing or amount, or both, are uncertain.
D. an expense in U.S. GAAP, not a liability; that provision in IFRS refers to a liability whose timing or amount, or both, are uncertain.
E. none of the above

 

44. Allowance for Uncollectibles contra account appears among the _____ on a firm’s balance sheet as a(n) _____.  
A. liability; subtraction
B. liability; addition
C. assets; addition
D. assets; subtraction
E. shareholders’ equity; subtraction

 

45. When a firm decides that a particular customer account is uncollectible, it removes that account by debiting the _____ and crediting _____ This process is called writing off the account.  
A. Accounts Receivable, Gross; Allowance for Uncollectibles
B. Accounts Receivable, Net; Allowance for Uncollectibles
C. Allowance for Uncollectibles; Accounts Receivable, Gross
D. Allowance for Uncollectibles; Accounts Receivable, Net
E. Bad Debt Expense,  Accounts Receivable, Net

 

46. There are two approaches that management can use to estimate the amount of credit sales that would prove to be uncollectible, the are the _____.  Over time, the two methods, correctly used, will give the same cumulative income and asset totals. U.S. GAAP and IFRS do not require firms to use one or the other, and some firms use both methods.  
A. gross amount of sales procedure and the aging-of-accounts-receivable procedure.
B. percentage-of­sales procedure and the aging-of-accounts-receivable procedure.
C. percentage-of­cost of good sold procedure and the amount of accounts-receivable procedure.
D. percentage-of­cost of good sold procedure and the aging-of-notes-receivable procedure.
E. gross amount of sales procedure and the amount of accounts-receivable procedure.

 

47. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of _____of credit sales.  
A. .01% to .02%
B. 1% to 2%
C. 10% to 20%
D. 21% to 30%
E. 31% to 40%

 

48. After the firm estimates the amount of uncollectible accounts associated with the credit sales of each period, it makes an adjusting entry to debit _____ and credit _____. 
A. Bad Debt Expense; Accounts Receivable, Net
B. Bad Debt Expense; Accounts Receivable, Gross
C. Allowance for Uncollectibles; Bad Debt Expense
D. Bad Debt Expense; Allowance for Uncollectibles
E. Allowance for Uncollectibles; Accounts Receivable, Gross

 

49. Under the _____ procedure, the firm estimates and recognizes its bad debt expense; the offsetting credit increases the balance in the Allowance for Uncollectibles. Under the _____ procedure, the firm estimates the ending balance in the Allowance for Uncollectibles account and makes a credit entry to bring the balance to this amount; the offsetting debit is to Bad Debt Expense.  
A. aging; percentage-of-sales
B. percentage-of-sales; aging
C. percentage-of-sales; direct charge-off
D. direct charge-off; percentage-of-sales
E. percentage-of-sales; indirect charge-off

 

50. At the start of 2009, Colonial Designs’ Allowance for Uncollectibles balance is €120,000. During 2009, Colonial Designs’ credit sales were €5,000,000; of this amount, it expected 2% will become uncollectible. During 2009, Colonial Designs wrote off €70,000 of accounts receivable. At the end of 2009, Colonial Designs estimates, based on an aging of accounts, that the ending balance in the Allowance for Uncollectibles should be €130,000.  
A. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80,000
         Accounts Receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
B. Bad Debt Expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70,000
         Accounts Receivable, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70,000
C. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70,000
         Bad  Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
D. Bad Debt Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80,000
         Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  80,000
E. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  80,000
         Accounts Receivable, gross. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000

 

 

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31) Unplanned inventories increase when

A) real GDP is less than aggregate planned expenditure.

B) actual aggregate expenditure is greater than aggregate planned expenditure.

C) actual aggregate expenditure is equal to GDP.

D) aggregate planned expenditure is less than GDP.

E) actual aggregate expenditure is less than GDP.

 

32) When the change in unplanned inventories is positive, then

A) real GDP is less than aggregate planned expenditure.

B) real GDP equals aggregate planned expenditure.

C) real GDP is larger than aggregate planned expenditure.

D) economic growth will occur as the economy returns to equilibrium.

E) planned inventories will increase in order to return to equilibrium.

33) According to the aggregate expenditure model, when faced with unwanted inventory firms

A) are forced to go out of business.

B) decrease production.

C) immediately cut prices.

D) increase production.

E) do nothing and wait for equilibrium to be restored.

 

34) If real GDP ________ aggregate planned expenditure, then as a result firms ________ production.

A) equals; increase

B) exceeds; decrease

C) is less than; decrease

D) equals; decrease

E) exceeds; increase

 

35) A country reports that unplanned inventories increased during 2012. The increase in unplanned inventories leads to

A) the government decreasing production, which decreases GDP.

B) consumers increasing their consumption expenditure, which increases GDP.

C) firms decreasing production, which decreases GDP.

D) firms increasing production, which increases GDP.

E) actual aggregate expenditure being different than real GDP.

 

36) If a firm accumulates unwanted inventories, then it

A) will increase its production.

B) must hire more workers.

C) has actual investment that is less than its planned investment.

D) will decrease its production.

E) has actual investment equal to its planned investment.

37) If firms' inventories exceed their planned inventories, firms

A) increase production.

B) decrease production.

C) increase GDP.

D) increase income.

E) increase employment.

 

38) In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________.

A) exceed; increases

B) exceed; decreases

C) are less than; increases

D) are less than; decreases

E) exceed; does not change

 

39) When aggregate planned expenditure is less than GDP,

A) firms increase production until the economy reaches equilibrium expenditure.

B) firms decrease production until the economy reaches equilibrium expenditure.

C) the economy might be at its equilibrium expenditure and if it is, firms do not change their production.

D) the economy definitely is at its equilibrium expenditure and firms do not change production.

E) the economy definitely is at its equilibrium expenditure but even so, firms decrease production.

40) If real GDP exceeds aggregate planned expenditure, then the change in unplanned inventories is ________ and firms ________ production.

A) positive; increase

B) positive; decrease

C) negative; increase

D) negative; decrease

E) zero; do not change

 

 

default image
July 1, 2023
    

 

 

31) Unplanned inventories increase when

A) real GDP is less than aggregate planned expenditure.

B) actual aggregate expenditure is greater than aggregate planned expenditure.

C) actual aggregate expenditure is equal to GDP.

D) aggregate planned expenditure is less than GDP.

E) actual aggregate expenditure is less than GDP.

 

32) When the change in unplanned inventories is positive, then

A) real GDP is less than aggregate planned expenditure.

B) real GDP equals aggregate planned expenditure.

C) real GDP is larger than aggregate planned expenditure.

D) economic growth will occur as the economy returns to equilibrium.

E) planned inventories will increase in order to return to equilibrium.

33) According to the aggregate expenditure model, when faced with unwanted inventory firms

A) are forced to go out of business.

B) decrease production.

C) immediately cut prices.

D) increase production.

E) do nothing and wait for equilibrium to be restored.

 

34) If real GDP ________ aggregate planned expenditure, then as a result firms ________ production.

A) equals; increase

B) exceeds; decrease

C) is less than; decrease

D) equals; decrease

E) exceeds; increase

 

35) A country reports that unplanned inventories increased during 2012. The increase in unplanned inventories leads to

A) the government decreasing production, which decreases GDP.

B) consumers increasing their consumption expenditure, which increases GDP.

C) firms decreasing production, which decreases GDP.

D) firms increasing production, which increases GDP.

E) actual aggregate expenditure being different than real GDP.

 

36) If a firm accumulates unwanted inventories, then it

A) will increase its production.

B) must hire more workers.

C) has actual investment that is less than its planned investment.

D) will decrease its production.

E) has actual investment equal to its planned investment.

37) If firms' inventories exceed their planned inventories, firms

A) increase production.

B) decrease production.

C) increase GDP.

D) increase income.

E) increase employment.

 

38) In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________.

A) exceed; increases

B) exceed; decreases

C) are less than; increases

D) are less than; decreases

E) exceed; does not change

 

39) When aggregate planned expenditure is less than GDP,

A) firms increase production until the economy reaches equilibrium expenditure.

B) firms decrease production until the economy reaches equilibrium expenditure.

C) the economy might be at its equilibrium expenditure and if it is, firms do not change their production.

D) the economy definitely is at its equilibrium expenditure and firms do not change production.

E) the economy definitely is at its equilibrium expenditure but even so, firms decrease production.

40) If real GDP exceeds aggregate planned expenditure, then the change in unplanned inventories is ________ and firms ________ production.

A) positive; increase

B) positive; decrease

C) negative; increase

D) negative; decrease

E) zero; do not change

 

 

default image
July 1, 2023
    

 

 

31) Unplanned inventories increase when

A) real GDP is less than aggregate planned expenditure.

B) actual aggregate expenditure is greater than aggregate planned expenditure.

C) actual aggregate expenditure is equal to GDP.

D) aggregate planned expenditure is less than GDP.

E) actual aggregate expenditure is less than GDP.

 

32) When the change in unplanned inventories is positive, then

A) real GDP is less than aggregate planned expenditure.

B) real GDP equals aggregate planned expenditure.

C) real GDP is larger than aggregate planned expenditure.

D) economic growth will occur as the economy returns to equilibrium.

E) planned inventories will increase in order to return to equilibrium.

33) According to the aggregate expenditure model, when faced with unwanted inventory firms

A) are forced to go out of business.

B) decrease production.

C) immediately cut prices.

D) increase production.

E) do nothing and wait for equilibrium to be restored.

 

34) If real GDP ________ aggregate planned expenditure, then as a result firms ________ production.

A) equals; increase

B) exceeds; decrease

C) is less than; decrease

D) equals; decrease

E) exceeds; increase

 

35) A country reports that unplanned inventories increased during 2012. The increase in unplanned inventories leads to

A) the government decreasing production, which decreases GDP.

B) consumers increasing their consumption expenditure, which increases GDP.

C) firms decreasing production, which decreases GDP.

D) firms increasing production, which increases GDP.

E) actual aggregate expenditure being different than real GDP.

 

36) If a firm accumulates unwanted inventories, then it

A) will increase its production.

B) must hire more workers.

C) has actual investment that is less than its planned investment.

D) will decrease its production.

E) has actual investment equal to its planned investment.

37) If firms' inventories exceed their planned inventories, firms

A) increase production.

B) decrease production.

C) increase GDP.

D) increase income.

E) increase employment.

 

38) In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________.

A) exceed; increases

B) exceed; decreases

C) are less than; increases

D) are less than; decreases

E) exceed; does not change

 

39) When aggregate planned expenditure is less than GDP,

A) firms increase production until the economy reaches equilibrium expenditure.

B) firms decrease production until the economy reaches equilibrium expenditure.

C) the economy might be at its equilibrium expenditure and if it is, firms do not change their production.

D) the economy definitely is at its equilibrium expenditure and firms do not change production.

E) the economy definitely is at its equilibrium expenditure but even so, firms decrease production.

40) If real GDP exceeds aggregate planned expenditure, then the change in unplanned inventories is ________ and firms ________ production.

A) positive; increase

B) positive; decrease

C) negative; increase

D) negative; decrease

E) zero; do not change

 

 

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