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 b. $8,000 c. $33,000 d. $17,000
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,