Sunday, 30 August 2015

Accounts receivable Page9 Multiple choice questions and Answers pdf

81. Probabilistic inventory control models require consideration of the possibility of ________.
a. stock outs
b. seasonal dating
c. an inventory cycle
d. carrying costs
Ans: A

82. Rich Corporation's annual carrying costs are 25 percent of the inventory value. The product cost is $85 a unit and they can replenish inventory instantaneously. The cost of placing an order is $55. If Rich Corporation plans to sell 5,000 units next year, what should be their economic order quantity?
a. 5,000 units.
b. 114 units.
c. 81 units.
d. 161 units.
Ans: D

83. Wing Corporation's annual carrying costs are 25 percent of the inventory value. The product cost is $65 a unit. The cost of placing an order is $100, and the EOQ is 785 units. If the corporation plans to sell 50,000 units next year, what should be the total annual ordering and carrying costs?
a. $12,748
b. $31,882
c. $6,442
d. $2,506,378
Ans: A

84. The basic EOQ model assumes that orders to replenish the inventory of an item are filled instantaneously.
a. True
b. False
Ans: A

85. If the lead-time is constant and known with certainty, the optimal order quantity and the time when an order should be placed are not affected.
a. True.
b. False.
Ans: B

86. The amount of information a business can collect on a credit application is limited only by the cost consideration.
a. True.
b. False.
Ans: B

87. Under the Allowance method of accounting for uncollected accounts, an adjusting entry is made each period debiting Bad Debts Expense and crediting
a.  Accounts Receivable
b.  Allowance for Doubtful Accounts
c.  Cash
d.  None of these
Ans: b

88. The dollar amount for the adjusting entry referred to in item 1 could be considered:
a.  the actual amount of bad debts expense incurred in the previous period.
b.  the total of the accounts actually written off this period.
c.  an estimate of the accounts likely to become uncollectible in the near future.
d.  the cash paid out to collection agencies to put pressure on non-paying customers.
Ans: c

89. The estimate of bad debts can be based on either a percentage of net sales, or:
a.  a percentage of aged receivables.
b.  a percentage of actual bad debts deemed uncollectible last period.
c.  a percentage of next month's anticipated sales.
d.  None of these
Ans: a

90. Johnson has Accounts Receivable of $100,000 and Allowance for Doubtful Accounts of $5,000; its sales this year were $300,000. The cash realizable value of the receivables is:
a.  $200,000
b.  $100,000
c.  $95,000
d.  None of these
Ans: c
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