Ac550 Exam

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1.| Question :| (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application.|

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| Student Answer:| | : Historical cost principle| | 1 : Earnings process completed and realized or realizable | | | | : Going concern principle| | 2 : Cost of providing financial information versus the benefits derived from its use | | | | : Matching principle| | 3 : Accruals and deferrals in adjusting and closing process | | | | : Monetary unit| | 4 : Business enterprise assumed to have a long life | | | | : Revenue recognition principle| | 5 : Stable dollar assumption | | | | : Full disclosure principle| | 6 : Notes as part of necessary information to a fair presentation | | | | : Reliability characteristic| | 7 : Valuing assets at amount originally paid for them | | | | : Cost-benefit relationship| | 8 : The impact of an item on the overall financial operations of a company | | | | : Materiality constraint| | 9 : Presentation of error-free information with representational faithfulness | | | |

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2.| Question :| (TCO B) Adjusting Entries: Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to the Unearned Rent Account. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.|

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| Student Answer:| | Unearned Rent Revenue 59,300 Rent Revenue 59,300 Cash receipts $60,000 Beginning balance 5,300 Ending balance (6,000) Rent revenue $59,300 | |
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3.| Question :| (TCO B) Adjusting Entries: Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $1,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $1,000. The 2010 income statement showed interest revenue in the amount of $2,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.|

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| Student Answer:| | Interest Receivable 1000 Interest Revenue 1000 Interest Revenue (per books) 2900 Interest rev received (2010) 1900 Interest accrued 1000 | |
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| Comments:| Answer is not correct. |
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4.| Question :| (TCO B) Adjusting Entries: Accumulated depreciation-machinery at 1/1/10 was $150,000. At 12/31/10, the balance of the account was $300,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $100,000 and was 1/2 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.|

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| Student Answer:| | Depreciation Expense 200000 Accumulated Depreciation—Equipment 200000 Ending balance 300000 Beginning balance 150000 Difference 150000 Write-off at time of sale 1/2 × $100,000 50000 200000 | |

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5.| Question :| (TCO B) Adjusting Entries: Allowance for doubtful accounts on 1/1/10 was $70,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $70,000 and during 2010 bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.|

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| Student Answer:| | Bad Debt Expense 40,000 Allowance for Doubtful Accounts 40,000 Ending balance $70,000 Beginning balance 70,000 Difference 0 Written off 40,000...
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