Questions -

Q1. At December 31, 2018, Lyndsey's Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2018 for $75 each. Lyndsey's business operates on a gross profit of 60 percent of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2018?

1. $0

2. $30,000

3. $45,000

4. $75,000

Q2. Which of the following is a correction of an error?

A) A change in an estimated bad debt expense.

B) A change in the estimated warranty expense.

C) A change from cash basis accounting to accrual basis accounting.

D) A change from the Average Cost to the FIFO inventory method.

Q3. Which of the following is a change in accounting principle?

A) A change in the estimated service life of machinery.

B) A change from FIFO to LIFO inventory methods.

C) A change in the salvage value for a piece of equipment.

D) A change from cash basis accounting to accrual basis accounting.

Q4. Haunting Company has the following items: write-down of inventories, $360,000; loss on disposal of the whole Sports Division, $555,000; and loss due to strike, $339,000. Ignoring income taxes, what total amount should Haunting Company report as ordinary losses?

A) $-0-

B) $555,000

C) $699,000

D) $894,000