MGMT 200 EXAM 2 (PURDUE UNIVERSITY) NEWEST 2024 EXAM 2 AND PRACTICE EXAM 300+QUESTIONS AND CORRECT DETAILED ANSWERS|ALREADY GRADED A+|| BRAND NEW!!

MGMT 200 EXAM 2 (PURDUE
UNIVERSITY) NEWEST 2024 EXAM
2 AND PRACTICE EXAM
300+QUESTIONS AND CORRECT
DETAILED ANSWERS|ALREADY
GRADED A+|| BRAND NEW!!
A company, using the allowance method of recording credit losses,
wrote off a customer's account in the amount of $1,000. Later, the
customer paid the account. The company reinstated the account
by means of a journal entry and then recorded the collection.
What is the result of these procedures?
A. Increase in total assets by $1,000
B. Decrease total assets by $1,000
C. Decreases total assets by $2,000
D. Has no effect on total assets - ANSWER-D. Has no effect on total assets
The direct write‐off method is not an acceptable
method for GAAP because it fails to report:
A. Revenue from the sale of goods or services to
customers
B. Cash collected from customers
C. Accounts receivable at net realizable value
D. The amounts receivable from customers - ANSWER-C. Accounts receivable at net
realizable value
Which of the following inventory accounts consists of
items for which the manufacturing process has not
begun?
A. Raw Materials
B. Work‐In‐Process
C. Cost of Goods Sold
D. Finished Goods - ANSWER-A. Raw Materials
To which account is the cost of inventory
transferred when a product is sold?
A. Sales
B. Freight expense
C. Gross margin
D. Cost of goods sold - ANSWER-D. Cost of goods sold
On August 1, 2017, Kensal Green Corp. lends cash and
accepts a $1,000 note receivable that offers 12%
interest and is due in six months. How much interest
revenue will Kensal Green report during 2017?
A. $60
B. $50
C. $40
D. $30 - ANSWER-B. $50
(Interest revenue = $1,000 × 12% × 5/12 = $50)
A company accepts a note receivable of $5,000 on
October 1, 2018, that matures in 10 months and has
stated interest of 6%. What amount of interest revenue
will the company record in 2018 and 2019?
A. 2018 = $100; 2019 = $150
B. 2018 = $150; 2019 = $100
C. 2018 = $75; 2019 = $175
D. 2018 = $0; 2019 = $250 - ANSWER-C. 2018 = $75; 2019 = $175
Interest Revenue =
Face value ×Annual interest rate × Fraction of the year 2018: Interest Revenue =
$5,000 × 6% × 3/12 = $75
2019: Interest Revenue = $5,000 × 6% × 7/12 = $175
The formula for the receivables turnover ratio is
A. Average accounts receivable divided by average
total assets.
B. Net credit sales divided by average total assets.
C. Average accounts receivable divided by net
credit sales.
D. Net credit sales divided by average accounts
receivable. - ANSWER-D. Net credit sales divided by average accounts
receivable.
If the receivables turnover ratio increased during the
year,
A. receivable collection improved.
B. receivables collection slowed down.
C. sales revenues increased at a faster rate that
accounts receivables increased.
D. the days to collect also increased. - ANSWER-A. receivable collection improved.
Which of the following statements is true with respect
to the percentage‐of‐credit‐sales method for
estimating uncollectible accounts?
A. This method is referred to as the balance sheet
approach
B. This method does not allow for future uncollectible
accounts
C. The amount recorded for bad debt expense does not
depend on the balance of the allowance for
uncollectible accounts
D. Under this method, bad debt expense is recorded at the
time of an actual bad debt - ANSWER-C. The amount recorded for bad debt expense
does not depend on the balance of the allowance for uncollectible accounts
Using the percentage of net sales method, uncollectible
accounts expense for the year is estimated to be
$75,000. If the balance of the Allowance for
Uncollectible Accounts is an $15,000 credit before
adjustment, what is the balance after adjustment?
A. $15,000
B. $75,000
C. $90,000
D. $60,000 - ANSWER-C. $90,000 ($75,000 + $15,000 = $90,000)
Bampton, Inc. uses the percentage‐of‐credit‐sales method to
record its expected credit losses. It estimates its losses at two
(2%) percent of credit sales, which were $1,000,000 during the
year. The Allowance for Doubtful Accounts had a credit balance
of $5,000 before adjustment at year‐end. What is the
adjustment to Bad Debt Expense and the Allowance for Doubtful
Accounts?
A. $ 5,000
B. $25,000
C. $20,000
D. $15,000 - ANSWER-C. $20,000
Which of the following statements is true?
A. Product costs affect only the balance sheet
B. Product costs affect only the income
statement
C. Product costs eventually affect both the
balance sheet and the income statement.
D. Period costs affect only the balance sheet - ANSWER-C. Product costs eventually
affect both the
balance sheet and the income statement.
Costs that are expensed when incurred are
called?
A. Product costs
B. Direct costs
C. Inventoriable costs
D. Period costs - ANSWER-D. Period costs
(Period costs include:
• Selling expenses
• Advertising expenses
• Administrative expenses)
Which of the following is not a period cost?
A. Wages for a machine operator
B. Sales salaries
C. The salaries of a company's administrative
office
D. Sales commissions - ANSWER-A. Wages for a machine operator
The cost of goods sold during the year is classified as
a(n) ______ in the ______.
A. Revenue; Income statement
B. Asset; Balance sheet
C. Expense; Income statement
D. Liability; Balance sheet - ANSWER-C. Expense; Income statement
One of the major differences between an airline and a
steel manufacturer is that a steel manufacturer must
account for:
A. Revenues
B. Inventory
C. Salary expenses
D. Employee salaries - ANSWER-B. Inventory (Airlines (service companies) sell a
service not a product (inventory).)
Which of the following inventory accounts consists of
items for which the manufacturing process has not
begun?
A. Raw Materials
B. Work‐In‐Process
C. Cost of Goods Sold
D. Finished Goods - ANSWER-A. Raw Materials
To which account is the cost of inventory
transferred when a product is sold?
A. Sales
B. Freight expense
C. Gross margin
D. Cost of goods sold - ANSWER-D. Cost of goods sold
Clifford Gardens, Inc. has ending inventory of $20,000,
purchases during the year of $50,000, and beginning
inventory of $10,000, cost of goods sold equals
$30,000.
A. True
B. False - ANSWER-B. False Beginning Inventory $ 10,000
Purchases50,000 ---
Cost of goods available for sale 60,000
Ending Inventory(20,000) ---
Cost of Goods Sold $ 40,000
Brighton Company, Inc. began the period with $10,000 in
inventory. Brighton also purchased an additional $25,000 of
inventory and returned $5,000 for a full credit. A physical count
of the inventory at year‐end revealed an inventory on hand of
$10,000. What was Brighton's cost of goods sold (CGS) for the
period?
A. $40,000
B. $25,000
C. $20,000
D. $10,000 - ANSWER-C. $20,000
Which of the following is not considered an
operating expense?
A. Rent expense
B. Interest expense
C. Administrative (office) expense
D. Advertising expense - ANSWER-B. Interest expense
Which of the following is not a subtotal?
A. Gross margin
B. Net income
C. Income from operations
D. Cost of goods sold - ANSWER-D. Cost of goods sold
Which of the following appears in different
sections of the income statement when
prepared on a single‐step basis and when
prepared on a multistep basis?
A. Sales commissions
B. Rent expense
C. Interest expense
D. Sales - ANSWER-C. Interest expense
Cost of goods sold equals:
A. Beginning inventory ‐ net purchases + ending
inventory.
B. Beginning inventory ‐ accounts payable ‐ net
purchases.
C. Net purchases + ending inventory ‐ beginning
inventory.
D. Beginning inventory + net purchases ‐ ending
inventory. - ANSWER-D. Beginning inventory + net purchases ‐ ending inventory.
Given the information in the table below, what is the company's
gross profit?
Sales revenue $350,000
Accounts receivable $280,000
Ending inventory $230,000
Cost of goods sold $180,000
Sales returns $50,000
Sales discount $20,000
A. $280,000
B. $170,000
C. $50,000
D. $100,000 - ANSWER-D. $100,000
Baker Fine Foods has beginning inventory for the year