Reference no: EM13819035

Ques. 1 Gross Accounts receivable $10,000

• Allowance for doubtful accounts $200
• Net sales for the year $1,50,000
• In the past,1% of sales had proved uncollectible.

What would be adjusted balance of the Allowance account under Income statement apprroach.

a. $1700
b. $1000
c. 1200
d. 1500

Ques. 2 After ageing the receivables, Tim Toys estimates that $1,010 will not be collected and the allowance account has a debit balance of $205. The adjusting entry would be for:

a. $805
b. $1010
c. $1215
d. $205

Ques. 3 After the accounts are adjusted and closed at the end of the year, Accounts receivable has a balance of $450,000 and Allowance for doubtful accounts has balance of $18,000. What is the net realizable value of the Accounts receivable.

a. $450,000
b. 468,000
c. $432,000
d. The amount cannot be determined from the given information.

Ques. 4 No entry was recorded to reinstate a bad debt when making a collection. The method is being used. This error would cause:

a. total assets to be overstated
b. total liabilities to be understated
c. net income to be understated
d. none of these are correct.

Ques. 5 At December 31, 2012, Brookes Horse Stable unadjusted Allowance for doubtful accounts showed a debit balance of $432.An agining of the Accoutns receivable indicated probable uncollectible accounts of $1,000. The year end adjusting entry for Bad debts expenses:

a. include a debit to the Allowance account for 568
b. include a credit to the allowance account for 42
c. include a debit to the allowance account for 822
d. include a credit to the Allowance account for 1,432

Ques. 6 The aging of Accounts receivable is an income statement approach

- True
- False

Ques. 7 Interest income is on a merchandise company's income statement under the heading:

a. Sales revenue
b. Other income or interest income
c. Unearned revenue
d. Notes receivable

Ques. 8 When an interest bearing note comes due and is uncollectible, the Journal entry includes:

a. debiting Notes receivable, crediting Accounts receivable
b. debiting Notes receivable, crediting Accounts receivable and interest revenue
c. debiting Accounts receivable and crediting interest revenue
d. debiting Accounts receivable and creditng notes receivable and interest reveue.

Ques. 9 The proceeds from discounting a note receivable are the

a. Principal + discount
b. maturity value - discount
c. principal - discount
d. maturity value - principal

Ques. 10 The journal entry to record the payment of a discounted note at maturity is a debit to Notes Payable and Interest expenses and Interest expense, and credit to cash

a. True
b. False

Ques. 11 The Maturity date for a 21 day note dated February 10, 2008, a leap year is:

a. February 10
b. March 2
c. March 3
d. March 1

Ques. 12 A note that is not paid on the maturity date is considered dishnoured.

- True
- False

Ques. 13 A customer returned merchandise that had been paid for within a discount period for credit. The entry was recorded with a debit to sales returns and allowances and a credit to Accounts recivable for the net amount. This error would cause:

a. the period end assets to be understated.
b. the period end liabilites to be understated.
c. the period's net income to be understated.
d. None of these are correct.

Ques. 14 An inventory ledger may be used to track inventory

- True
- False

Ques. 15 Under the perpetual inventory system, which of the following accounts would not be used:

a. Sales
b. Purchases
c. Cost of goods sold
d. Merchandise Inventory

Ques. 16 The depreciation method which charges more expense in earlier years than in later years is the:

a. Straight line method
b. decling balance method
c. units of production method
d. All of these

Ques. 17 The depreciation method that does not base the expense on the passage of time but on the level of use is:

a. Units of production
b. straight line
c. modified accelerated cost recovery
d. double decling balance.

Ques. 18 Some of the past depreciation is canceled in recording an extra ordinary repair.

a. True
b. False

Ques. 19 Using MACRS rates for a 5, 7 and 10 year property. What is the percentage for the depreciable rate

a. 200 percent
b. 150 percent
c. 125 percent
d. 100 percent

Ques. 20 The agreed upon ratio for dividing earnings or losses of a partnership is called:

a. interest allowance
b. Salary allowance
c. on the basis of profit and loss ratio
d. by the interest method

Ques. 21 A bonus paid by an incoming partner to the old partner is shared:

a. equally
b. by the salary method
c. on the basis of profit and loss ratio
d. by the interest method

Ques. 22 Many associations such as medical centres and law firms could organize as a

a. Sole partnership
b. corporation
c. partnership
d. All of these

Ques. 23 The sale of common stock above par was recorded by crediting common stock for the total amount. This error would cause:

a. the period end stockholder's equity to be overstated
b. the period end stockholder's equity to be understated
c. the periods net income to be understated
d. None of these are correct

Ques. 24 Authorized capital stock is

a. shares listed in the charter
b. shares issued to the corporation's officers
c. shares sold and in stockholders possession
d. shares that pay dividends.

Ques. 25 Soy.com corporation has 100 shares of $100, 6% cumulative preferred stock and 1,000 shares of $10 par value common stock outstanding. The company paid $2,000 cash dividends including one year dividends in arrears to preferred stockholders. Preferred stockholders received:

a. $1,200
b. $2,000
c. $182
d. $600

Ques. 26 At the end of the accounting cycle, net income will be closed into:

a. Tresury Stock
b. Paid in Capital
c. Cash
d. Retained Earnings

Ques. 27 A prior period adjustment for depreciation would affect what account in the shareholder's equity section ?

a. Capital account
b. Paid in capital in excess of par -common stock
c. Retained earnings
d. Approtions

Ques. 28 On the date of record, the journal entry would be:

a. a debit to Dividends payable
b. a credit to Dividends payable
c. a credit to cash
d. No Entry

Ques. 29 The payment of wages was debited to Retained earnings. The error would cause:

a. the period end assets to be understated
b. the period end liabilites to be understaed.
c. the period end stockholders equity to be understated
d. the period net income to be understated.

Ques. 30 A fund set up so that a bond can be retired at maturity is called a:

a. sinking fund
b. bond payable fund
c. stock fund
d. retirement fund

Ques. 31 A $200,000, 8% bond issue was sold at face value and later redeemed at 104. The corporation would leave a:

a. gain of $20,000
b. loss of $20,000
c. gain of $8,000
d. loss of $8,000

Ques. 32 The payment of quarterly interest on 12%, $60,000 bonds would be:

a. debit to cash $3,600, Credit bonds interest expense $3,600
b. debit Bonds interest expense $7,200, credit cash $7,200
c. debit cash $1,800, Credit bonds interest expense $1,800
d. debit Bonds interest expense $1,800, credit cash $1,800

Ques. 33 Activities that pay and collect interest on loans are:

a. financing and investing activities
b. operating and financining activities
c. operating and investing activitis
d. marketing activities

Ques. 34 The balance of Supplies has decreased during the year. How would this event affect the statement of cash flows operation section - indirect method

a. it is already included in the net income.
b. it would affect the operations sections positively
c. it would affect the operations section negatively
d. it would not affect the cash flows from operations.

Ques. 35 Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

a. the operating activities section
b. the financing activities section
c. the investing activities section
d. None of these

Ques. 36 The Accounts payable balance has decreased during the year. How would this even affect the statement of cash flows operations section - indirect method.

a. it is alredy included in the net income.
b. it would affect the operation section positively
c. It would affect the operations section negatively
d. It does not affect the cash flows from operations

Ques. 37 Tom's Toys has a cash balance of $80,000; temporary investments of $20,000; net receivables of $60,000; and inventory of $450,000.Tom's current liabilites total $200,000. His quick (acid-test) ratio is:

a. 3.05 to 1
b. 2.25 to 1
c. .80 to 1
d. 0.54 to 1

Ques. 38 If management wishes to know how well the inventory is moving for a business, they could use the:

a. accouts receivable turnover
b. inventory turnover
c. acid - test ratio
d. current ratio

Ques. 39 If the average collection period is 35 days, this means:

a. from the date of purchase to the date of payment is 35 days
b. from the date of sale to the date of receipt of payment is 35 days
c. from the date of discount to the date of receipt of payment is 35 days
d. None of these answers are correct.

Ques. 40 If current assets are $75,000 and current liabilites are $15,000, the current ratio is:

a. 5:1
b. 0.2:1
c. 0.5:1
d. None of these

Ques. 41 When a voucher transaction does not fil in the special columns of the voucher register, it will be recorded in the:

a. general Journal
b. sundry column
c. vouchers payable credit column
d. both sundry column and vouchers payable credit column

Ques. 42 Emily purchased $2,000 of merchandise on April 1 and recorded it in the voucher register. On April 8, $400 of the merchandise proved to be defective. The entry would be:

a. reduce the original voucher
b. record a purchae return in general journal
c. cancel the original voucher and record a revised voucher
d. None of these answers are correct.

Ques. 43 Vouchers arerecorded in alphabetical order

a. True
b. False

Ques. 44 The entry to record payment of a voucher for an invoice for an invoice after the discount period under the gross method will include:

a. debit to vouchers payable
b. credit to purchase discounts
c. a debit to discount lost
d. None of these are correct.

Ques. 45 Advertising totaled $10,000; $3,000 was indirect. What would be the best choice to use to allocate the indirect cost?

a. Allocate the indirect expense based on square feet
b. Allocate the indirect expense based on gross Sales
c. Change indirect expense to administrative expense
b. Allocate the indirect expense based on goods shipped

Ques. 46 To calculate departmental gross profit, separate accounts should be set up for sales, Purchases etc, for each department.

a. True
b. False

Ques. 47 Sports apparel departments gross profit is $300,000; clothing section gross profit is $200,000; indirect advertising expense is $6,000. Indirect expenses charged to the sports section based on gross profit would be $3,600.

a. True
b. False

Ques. 48 A cost of goods manufactured statement should be prepared below the Income statement has been prepared.

a. True
b. False

Ques. 49 The following data are available for Starbrite Corporation estimated diect labor hours 800

Estimated Overhead $36,000

If overhead is applied based on direct labor hours, the predetermined overhead rate is:

a. $45
b. $450
c. $222
d. $2,220

Ques. 50 The Major difference on the balance sheet of a manufacturing company is to include:

a. a retained earnings section
b. three inventory accounts rather than one
c. prepaid expenses
d. accrual payroll