ACC 291T SUMMATIVE ASSESSMENT CASH BUDGETING AND EVALUATING RECEIVABLES AND INVENTORY QUESTIONS WITH COMPLETE ANSWERS

With a LIFO inventory cost flow assumption, what is assumed about the units that are
sold and the units that remain in ending inventory?


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New units sold, old units in ending inventory




What is a sales discount?

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Incentive for the buyer to pay more quickly




At the end of Year 1, Vaststrom Company's bad debt allowance, as a percentage of
accounts receivable, was 20%. By the end of Year 2, that percentage was 27%. Given
these data, which ONE of the following statements is true with respect to the
creditworthiness of the credit customers of Vaststrom Company at the end of Year 2
compared to Year 1?


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The average creditworthiness of the credit customers DECLINED during
the year. In other words, the quality of the accounts receivable DECLINED
during the year.




Which item is one of the two main criteria in the revenue recognition principle?


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Earnings process is substantially complete.




Which items are subtracted in computing NET SALES for the year?


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Sales discounts and sales returns and allowances