1. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and that is usually the most reliable is the A. Direct write-off method B. Income statement method C. Aging of accounts receivable method D. Simplified balance sheet method 2. An accounting procedure that (1) estimates and reports bad debt expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash inflow that is expected from their collection is the A. Allowance method of accounting for bad debts B. Aging of accounts receivable C. Adjustment method for uncollectible debts D. Direct write-off method of accounting for bad debts 3. Understatement of ending inventory causes A. Cost of goods sold to be overstated and net income to be understated B. Cost of goods sold to be overstated and net income to be overstated C. Cost of goods sold to be understated and net income to be understated D. Cost of goods sold to be understated and net income to be overstated 4. Goods in transit are included in inventory A. At any time in transit B. When the purchaser is responsible for paying freight charges C. When the supplier pays the freight charges D. When the purchaser is responsible for paying freight charges and when ownership has passed to the purchaser 5. When originally purchased, a vehicle had cost $23,000, with an estimated residual value of $1,500, and an estimated useful life of 8 years. After 4 years of straight-line depreciation, the estimated useful life was revised from 8 to 6 years, but with zero residual value. The depreciation expense in year 5 should be A. $5,543.75 B. $2.687.50 C. $6,125.00 D. $10,750.00 6. ABC Inc. sold a machine that originally cost $100,000 for $75,000. The accumulated depreciation on the machine to the date of sale was $40,000. On this sale, ABC Inc. should recognize: A. $20,000 gain B. $25,000 gain C. $40,000 loss D. $60,000 gain 7. Marissa's Modes is a retail outlet for ladies fashion goods. At the year-end inventory on 31/12/2017, Marissa's Modes found that it had goods on hand that had cost $62,500, $12,500 of which a contract has been signed for and payment received and the remaining which it expects to sell in 2018 for approximately $125,000 in total. The inventory in the balance sheet as at 31/12/2017 would be valued at __________. A. $125,000 B. $ 62,500 C. $ 50,000 D. $ 12,500 8. Measuring assets at what they originally cost the company is an example of the accounting concept of ____________. A. going concern B. disclosure C. recognition D. historic cost 9. Recognizing revenues in the period when they are earned, rather than the period when the cash is received, is an example of which accounting concept? A. Business entity B. Matching C. Conservatism D. Historic cost 10. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and that is usually the most reliable is the A. Direct write-off method B. Income statement method C. Aging of accounts receivable method D. Simplified balance sheet method E. Accounts receivable method