ACC/291 Final Examination Study Guide
This study guide will prepare you for the Final Examination you will complete in Week Five. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.
Week One: Principle Assets
Objective: Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.
1. The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the a. aging accounts receivable method
b. direct write-off method.
c. percentage of receivables method.
d. percentage of sales method.
2. Using the percentages of receivables method for recording bad debts expense, estimated uncollectible accounts are $25,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debts expense for that period? a. $25,000
Objective: Distinguish between tangible and intangible assets.
3. Copyrights are granted by the federal government
a. for the life of the creator or 70 years, whichever is greater b. for the life of the creator plus 70 year
c. for the life of the creator or 70 years, whichever is shorter d. and therefore cannot be amortized
4. The cost of a patent should be amortized over
a. 20 years
b. the shorter of its legal life or its useful life
c. the longer of its legal life or its useful life
d. its useful life
Objective: Identify the entries associated with acquisition, disposal, and sales of plant assets.
5. Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true?
a. Excavation fees are capitalized but building permit fees are not. b. Architect fees are capitalized but building permit fees are not. c. Interest is capitalized during the construction as part of the cost of the building. d. The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds.
6. Orr Corporation sold equipment for $12,000. The equipment had an original cost of $36,000 and accumulated depreciation of $18,000. As a result of the sale a. net income will increase $12,000
b. net income will increase $6,000
c. net income will decrease $6,000
d. net income will decrease $12,000
Objective: Distinguish between revenue and capital expenditures, and the entries associated with each.
7. The paneling of the body part of an open pickup truck would be classified as a. a revenue expenditure
b. an addition
c. an improvement
d. an ordinary repair
8. Additions and improvements
a. occur frequently during the ownership of a plant asset
b. normally involve immaterial expenditures
c. increase the book value of plant assets when incurred
d. typically only benefit the current accounting period
Week Two: Liabilities
Objective: Differentiate accounts payable, notes payable, and accrued expenses.
9. Interest expense on an interest bearing note is
a. always equal to zero
b. accrued over the life of the note
c. only recorded at the time the note is issued
d. only recorded at maturity when the note is paid
10. The interest charged on a $100,000 note payable, at the rate of 6%, on a 60-day note would be a. $6,000
Objective: Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts.
11. On January 1, 2011, Grant Corporation issued $4,000,000, 10-year,...
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