Final Exam
ACC/291 - Final Exam Study Guide
1. Ordinary repairs are expenses to keep a plant asset functioning properly:
Revenue expenditures
Explanation: Revenue expenditure is an ongoing cost to maintain the operational efficiency of an asset.
2. Percentage of receivables method:
Estimated uncollectible accounts = $15,000.
Allowance for Doubtful Accounts = $3,000
What is the amount of bad debts expense?
$12,000
Explanation: This entry simply requires you to subtract 3,000 from the 15,000 in estimated uncollectable accounts.
3. What is true about intangible assets?
They should be reported with a separate classification on the balance sheet
Explanation: Intangible assets should be organized into its own distinct group on the balance sheet.
4. Intangible assets are the rights and privileges from assets with which characteristic?
They do not have physical substance
Explanation: Intangible assets are things like copyrights, patents, trademarks, trade secrets, and software code.
5. What is the book value of an asset?
The asset’s cost less its accumulated depreciation
Explanation: Book value is its value on paper, but does not accurately reflect the true market value.
6. Gains experienced on the sale of plant assets should:
Be recognized immediately
Explanation: If a company sells an asset for a capital gain, it will need to immediately report this gain on the books.
7. Percentage of sales method for recording bad debts expense.
Cash sales = $300,000.
Credit sales = $1,200,000.
1% = sales percentage estimated by management.
Enter the correct adjusting entry:
Bad Debts Expense --- $12,000 Allowances for Doubtful Accounts --- $12,000
Explanation: Debit bad debts expense, credit allowance for doubtful accounts.
8. Costs to improve the operating efficiency or extend the life of a plant asset are commonly called?
Capital expenditures
Explanation: If you add a new arm to your
1. Ordinary repairs are expenses to keep a plant asset functioning properly:
Revenue expenditures
Explanation: Revenue expenditure is an ongoing cost to maintain the operational efficiency of an asset.
2. Percentage of receivables method:
Estimated uncollectible accounts = $15,000.
Allowance for Doubtful Accounts = $3,000
What is the amount of bad debts expense?
$12,000
Explanation: This entry simply requires you to subtract 3,000 from the 15,000 in estimated uncollectable accounts.
3. What is true about intangible assets?
They should be reported with a separate classification on the balance sheet
Explanation: Intangible assets should be organized into its own distinct group on the balance sheet.
4. Intangible assets are the rights and privileges from assets with which characteristic?
They do not have physical substance
Explanation: Intangible assets are things like copyrights, patents, trademarks, trade secrets, and software code.
5. What is the book value of an asset?
The asset’s cost less its accumulated depreciation
Explanation: Book value is its value on paper, but does not accurately reflect the true market value.
6. Gains experienced on the sale of plant assets should:
Be recognized immediately
Explanation: If a company sells an asset for a capital gain, it will need to immediately report this gain on the books.
7. Percentage of sales method for recording bad debts expense.
Cash sales = $300,000.
Credit sales = $1,200,000.
1% = sales percentage estimated by management.
Enter the correct adjusting entry:
Bad Debts Expense --- $12,000 Allowances for Doubtful Accounts --- $12,000
Explanation: Debit bad debts expense, credit allowance for doubtful accounts.
8. Costs to improve the operating efficiency or extend the life of a plant asset are commonly called?
Capital expenditures
Explanation: If you add a new arm to your