A) seller normally pays the transportation costs B) buyer normally pays the tran

Question

A) seller normally pays the transportation costs B) buyer normally pays the transportation costs C) buyer and the seller split the transportation costs D) shipping company bears the transportation cost 6. If goods are sold on terms FOB shipping point, the 7. Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out Which of the following is true of the balance sheet presentation of the Allowance Bad Debts? A) It is reported as a current liability B) It is reported as an operating expense. C) It is reported as a separate, independent line item under current assets. D) It is shown as a contra account related to accounts receivable. 8. 9. The gain or loss on the sale of a plant asset is determined by comparing the mar value of assets received with the of asset sold. A) book value B) residual value C) original cost D) salvage value 10. Which of the following is a characteristic of a current liability? A) It creates a present obligation for future payment of cash or services. B) It cannot be settled with services. C) It is an avoidable obligation. D) It occurs because of a future transaction or event.

Explanation / Answer

6. Correct option is B. In case of FOB shipping points, the transportation costs are paid by buyer.

7. Correct option is D. Since as the costs are increasing, the earlier costs are less and hence FIFO would result in Lowest costs and highest income.

8. Correct option is D. Bad debt allowance is treated as contra account of account receivable.

9. A. Since the gain or loss is calculated by comparing the market value by current book value.

10. A. Since it creates a current obligation for the payment that will be done in future.

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