Chapter 7

Question 1

number of units at beg. + Purchase units

Answer 1

COGAS

Question 2

number of units at beg. + Purchase units - sold units=

Answer 2

remaining ending inv.

Question 3

FIFO

Answer 3

First in, first out

Question 4

LIFO

Answer 4

last in, first out

Question 5

Avg. Cost

Answer 5

COGAS/ total number of units available for sale

Question 6

COGAS- COGS=

Answer 6

End Inv.

Question 7

Which method provides the highest level of COGS?

Answer 7

LIFO

Question 8

Which method provides the highest level of net income/ gross profit?

Answer 8

FIFO

Question 9

Notes Recievable

Answer 9

has an interest rate associated with it

Question 10

Allowance for Doubtful Accounts

Answer 10

Contra-asset ADA

Question 11

A/R- A/D=

Answer 11

Net A/R

Question 12

Estimate ADA

Answer 12

Assets go down, ADA goes up
SHE goes down, Bad debt. ex. goes up

Question 13

Write off when we learn specifically who is not going to pay

Answer 13

Assets go down, A/R goes down
Assets go up, ADA goes down

Question 14

Record sale on account

Answer 14

A/R goes up, Rev. goes up

Question 15

Record returns of sales on account

Answer 15

A/R goes down, Inv. goes up, R+A goes down, COGS goes up

Question 16

Collect cash on accounts receivable

Answer 16

Cash up, A/R down

Question 17

Estimate uncollectible accounts

Answer 17

ADA goes down, Bad debt exp. goes down

Question 18

Record write-offs

Answer 18

A/R goes down, ADA goes up

Question 19

Inventory turnover

Answer 19

COGS/ avg. inventory
avg. inventory = beg. inv. + end. inv. /2

Question 20

Days in Inventory

Answer 20

365/Inv. turnover