GAAP is the accounting profession's rule-setting body. True False

GAAP is the accounting profession's rule-setting body. True False

Refer to the information in Exercise 4-15 and indicate whether the failure to include in-transit inventory as part of the physical

Refer to the information in Exercise 4-15 and indicate whether the failure to include in-transit inventory as part of the physical count results in an overstatement, understatement, or no effect on the following separate ratios: (a) gross margin ratio and (b) profit margin ratio.

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

True

False

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Mercy Hospital has the following balances on December 31, 2018, before any adjustment

Mercy Hospital has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $70,000; Allowance for Uncollectible Accounts = $1,400 (credit). Mercy estimates uncollectible accounts based on an aging of accounts receivable as shown below.

  Age Group        Amount

Receivable          Estimated Percent Uncollectible

  Not yet due      $ 50,000                15%

  0–30 days past due       11,000                   20%

  31–90 days past due     8,000                     45%

  More than 90 days past due      1,000                     85%

                                 

       Total               $ 70,000                 

                               

1. Estimate the amount of uncollectible receivables.

2. Record the adjustment for uncollectible accounts on December 31, 2018.

3. Calculate the net realizable value of accounts receivable.


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Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs

Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs.

Required:

For each transaction, indicate (1) whether cash is involved (yes or no), and, if cash is involved, (2) whether Witherspoon should classify it as operating, investing, or financing in a statement of cash flows, and (3) whether the cash is an inflow or outflow. Enter N/A if the question is not applicable to the statement.


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