21.Poinsetta Ventures sold $600,000 of goods during its fiscal 2007 year. At the end of the year, the company had accounts receivable of $60,000 outstanding. An estimated 5% of these receivables is uncollectible. The amount of net accounts receivable and revenue that should be reported on the financial statements at the end of 2007 is
Net Accounts
Receivable Revenue
a.$57,000 $600,000
b.$60,000 $597,000
c.$57,000 $597,000
d.$60,000 $600,000
22.Lennon Co. recorded sales (all credit) of $870,000 during the current year. The ending balance in accounts receivable was $167,040. On the basis of past experience, Lennon estimated uncollectible accounts as 4% of credit sales. The amount of bad debts expense that should be reported is
a.$6,682
b.$41,460
c.$28,118
d.$34,800
23.Bad debts expense is correctly recorded on the income statement as a(n)
a.addition to sales discounts
b.extraordinary expense
c.reduction of revenue
d.selling expense
24.Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company
a.is a manufacturer
b.follows a practice of deferring taxes whenever possible
c.had discontinued operations during the period
d.is using the LIFO method of inventory valuation
25.Which of the following would NOT be included in a company's work-in-process inventory account balance at year-end?
a.cost of materials added to production during the period
b.cost of labor added to production during the current period
c.depreciation on equipment used in production during the current period
d.cost of goods completed during the period
26.You would expect to see the account Work-in-Process Inventory reported on the balance sheet of a
Manufacturing Firm Merchandising Firm
a.Yes No
b.No No
c.Yes Yes
d.No Yes
27.Which of the following is NOT a category of inventory used in a manufacturing company?
a.work-in-process
b.finished goods
c.raw materials
d.overhead
28.Work-in-process includes all of the items below EXCEPT
a.cost of materials used in the production of goods
b.cost of labor used directly in the production of goods
c.selling costs associated with the goods
d.overhead costs incurred in the production of goods
29.Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH)
a.BFGI + RM + CGM - EFGI
b.RM + OH - CGM + EFGI
c.RM + WIP + OH - EFGI
d.BFGI + CGM - EFGI
30.The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit
a.No No
b.No Yes
c.Yes Yes
d.Yes No