ACC 291 Final Exam Guide

Topics: Balance sheet, Depreciation, Preferred stock Pages: 24 (5272 words) Published: July 31, 2014
ACC 291 Final Exam Guide
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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

b. $8,000
c. $33,000
d. $17,000
 
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 years
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
 
5. Mattox Company is building a new plant that will take 3 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
 
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
 
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
b. $3,333
c. $1,500
d. $1,000
 
 
11. On January 1, 2011, Grant Corporation issued $4,000,000, 10-year, 8% bonds at $102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2011 is a. Cash………………………………………….4,000,000 Bonds Payable…………………………………….4,000,000 b. Cash………………………………………….4,080,000 Bonds Payable………………………………….…4,080,000 c. Premium on Bonds Payable……………..……80,000

Cash…………………………………………4,000,000 Bonds Payable……………………………………4,080,000 d. Cash…………………………………………4,080,000 Bonds Payable……………………………………4,000,000 Premium on Bonds Payable………………………..80,000
 
 
12. Either the straight-line method or the effective-interest method of amortization will always result in a. the same amount of interest expense being recognized over the term of the bonds b. the same amount of interest expense being recognized each year c. more interest expense being recognized than if premium or discounts were not amortized d. the same carrying value each...
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