Please list The potential accounting errors or operating problems that might have caused the unexpected fluctuations for each of the accounts below: 1. COGS-Change in COGS larger than change in sales. COGS increasing faster than sales. Still profitable but it could be a troubling sign if trend continues. May not stay profitable for long 2. WARRANT EXPENSE- why warranty expense can be increased? 3. Interest expense- Why is it important to confirm that if interest expense declined, debt must be also decreasing? 4. Income before taxes- declining 5. Income tax expense-declining 6. Net income-net income and gross profit decreased 7. Cash-drastic increased and then declined in another year 8. Accounts Receivable-Increased year to year 9. Prepaid expensed-Sudden decrease and then sudden shoot

Please list The potential accounting errors or operating problems that might have caused the unexpected fluctuations for each of the accounts below: 1. COGS-Change in COGS larger than change in sales. COGS increasing faster than sales. Still profitable but it could be a troubling sign if trend continues. May not stay profitable for long 2. WARRANT EXPENSE- why warranty expense can be increased? 3. Interest expense- Why is it important to confirm that if interest expense declined, debt must be also decreasing? 4. Income before taxes- declining 5. Income tax expense-declining 6. Net income-net income and gross profit decreased 7. Cash-drastic increased and then declined in another year 8. Accounts Receivable-Increased year to year 9. Prepaid expensed-Sudden decrease and then sudden shoot

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...

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What are some possible negative signals when the product of the accounts receivable turnover ratio is lower (i.e., fewer times)?
Which of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditors
4. Under the allowance method, the entries at the time of. collection of an account previously written off would a. Decrease the allowance for doubtful accounts b. Increase net income c. Have no effect on the allowance for doubtful accounts d. Have no effect on net income 5. Collection of accounts receivable previously written off results in an increase in cash and an increase in a. Accounts receivable b. Allowance for doubtful accounts C. Bad debt expense d. Retained earnings
What will happen if the amount of bad debt expense is understated at year-end? a. Allowance for Doubtful Accounts will be overstated. O b. Net accounts receivable will be overstated. O c. Net income will be understated. O d. Stockholders' equity will be understated. РОСОРНONЕ SHOT ON POCOPHONE F1
Which of the following are ways companies could use accounts receivables for earnings management? Select all that apply. Overestimate uncollectibles to reduce earnings (cookie jar reserve) Underestimate uncollectibles to reduce earnings (cookie jar reserve) Underestimate uncollectibles to increase earnings Overestimate uncollectibles to increase earnings
If sales were overstated by recording a false credit sale at the end of the year, where could you find the false “dangling debit”?a. Inventory.b. Cost of goods sold.c. Bad debt expense.d. Accounts receivable.
Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) Increase in the turnover of accounts receivable B) Decrease in units sold C) Increase in collection expenses D) An increase in the percentage of doubtful accounts receivable.
Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) An increase in the percentage of doubtful collections. B) An increase in collection expenses. C) Decrease in units sold D) Increase in the turnover of accounts receivable.
1.) A Credit memo is a note from a seller indicating its intent to credit a customer’s accounts receivable. Select one: True False 2.) In a period of rising prices, the FIFO method of costing inventory results in income tax savings for companies. Select one: True False 3.) A debit memo represents a decrease to accounts payable and therefore results in less money owed to the seller. Select one: True False
Indicate whether each statement best describes the allowance method or the direct write-off method. List 1. Usually does not best match sales and expenses because Bad Debts Expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale. 2. When an account is written off, the debit is to Bad Debts Expense. 3. Does not predict Bad Debts Expense. 4. Accounts receivable on the balance sheet is reported at net realizable value. 5. Estimates Bad Debts Expense related to the sales recorded in that period. 6. Matches the estimated loss from uncollectible accounts receivable against the sales they helped create. Method Allowance Direct write-off
Question By restricting credit, and granting short maturities to speed up accounts receivable turnover, sales may decrease. True or false?
Indicate whether each statement best describes the allowance method or the direct write-off method. List 1. Does not predict bad debts expense. 2. Accounts receivable on the balance sheet is reported at net realizable value. 3. The write-off of a specific account does not affect net income. 4. When an account is written off, the debit is to Bad Debts Expense. 5. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale. 6. Estimates bad debts expense related to the sales recorded in that period. Method Allowance Direct write-off