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ACC 291 Final Exam ( 30/30 correct answers) / A+

ACC291 Final Exam

1) Hahn Company uses the percentage of sales method for recordingbad debts expense. For the year, cash sales are $300,000 and creditsales are $1,200,000. Management estimates that 1% is the salespercentage to use. What adjusting entry will Hahn Company make torecord the bad debts expense?
A. Bad Debts Expense 15000 Allowances for Doubtful Accounts15000
B. Bad Debts Expense 12000 Allowances for Doubtful Accounts12000
C. Bad Debts Expense $12,000 Accounts Receivable $12,000
D. Bad Debts Expense $15,000 Accounts Receivable $15,000

2) Using the percentage of receivables method for recording baddebts expense, estimated uncollectible accounts are $15,000. If thebalance of the Allowance for Doubtful Accounts is $3,000 creditbefore adjustment, what is the amount of bad debts expense for thatperiod?
A. $15,000
B. $12,000
C. $18,000
D. $8,000

3) Intangible assets
A. should be reported under the heading Property, Plant, andEquipment
B. should be reported as a separate classification on the balancesheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physicalsubstance

4) Intangible assets are the rights and privileges that result fromownership of long-lived assets that
A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain

5) The book value of an asset is equal to the
A. asset’s market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset’s cost less accumulated depreciation

6) Gains on an exchange of plant assets that has commercialsubstance are
A. deducted from the cost of the new asset acquired
B. deferred
C. not possible
D. recognized immediately

7) Ordinary repairs are expenditures to maintain the operatingefficiency of a plant asset and are referred to as
A. capital expenditures
B. expense expenditures
C. improvements
D. revenue expenditures

8) Costs incurred to increase the operating efficiency or usefullife of a plant asset are referred to as
A. capital expenditures
B. expense expenditures
C. ordinary repairs
D. revenue expenditures

9) When an interest-bearing note matures, the balance in the NotesPayable account is
A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and theface value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner

10) The interest charged on a $200,000 note payable, at a rate of6%, on a 2-month note would be
A. $12,000
B. $6,000
C. $3,000
D. $2,000

11) If a corporation issued $3,000,000 in bonds which pay 10%annual interest, what is the annual net cash cost of this borrowingif the income tax rate is 30%?
A. $3,000,000
B. $90,000
C. $300,000
D. $210,000

12) Hilton Company issued a four-year interest-bearing note payablefor $300,000 on January 1, 2011. Each January the company isrequired to pay $75,000 on the note. How will this note be reportedon the December 31, 2012 balance sheet?
A. Long-term debt, $300,000
B. Long-term debt, $225,000
C. Long-term debt, $150,000; Long-term debt due within one year,$75,000
D. Long-term debt, $225,000; Long-term debt due within one year,$75,000

13) A corporation issued $600,000, 10%, 5-year bonds on January 1,2011 for 648,666, which reflects an effective-interest rate of 8%.Interest is paid semiannually on January 1 and July 1. If thecorporation uses the effective-interest method of amortization ofbond premium, the amount of bond interest expense to be recognizedon July 1, 2011, is
A. $30,000
B. $24,000
C. $32,434
D. $25,946

14) When the effective-interest method of bond discountamortization is used    
A. the applicable interest rate used to compute interest expense isthe prevailing market interest rate on the date of each interestpayment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over thelife of the bond
D. interest paid to bondholders will be a function of theeffective-interest rate on the date the bonds were issued

15) If a corporation has only one class of stock, it is referred toas
A. classless stock
B. preferred stock
C. solitary stock
D. common stock

16) Capital stock to which the charter has assigned a value pershare is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock

17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulativepreferred stock and 50,000 shares of $1 par value common stockoutstanding at December 31, 2011. What is the annual dividend onthe preferred stock?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share

18) Manner, Inc. has 5,000 shares of 5%, $100 par value,noncumulative preferred stock and 20,000 shares of $1 par valuecommon stock outstanding at December 31, 2011. There were nodividends declared in 2010. The board of directors declares andpays a $45,000 dividend in 2011. What is the amount of dividendsreceived by the common stockholders in 2011?
A. $0
B. $25,000
C. $45,000
D. $20,000

19) When the selling price of treasury stock is greater than itscost, the company credits the difference to
A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock

20) The purchase of treasury stock
A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding
21) Marsh Company has other operating expenses of $240,000. Therehas been an increase in prepaid expenses of $16,000 during theyear, and accrued liabilities are $24,000 lower than in the priorperiod. Using the direct method of reporting cash flows fromoperating activities, what were Marsh’s cash payments for operatingexpenses?
A. $228,000
B. $232,000
C. $200,000
D. $280,000

22) Where would the event purchased land for cash appear, if atall, on the indirect statement of cash flows?
A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow

23) In performing a vertical analysis, the base for cost of goodssold is
A. total selling expenses
B. net sales
C. total revenues
D. total expenses

24) Blanco, Inc. has the following income statement (inmillions):
Using vertical analysis, what percentage is assigned to NetIncome?
A. 100%
B. 82%
C. 18%
D. 25%

25) Dawson Company issued 500 shares of no-par common stock for$4,500. Which of the following journal entries would be made if thestock has a stated value of $2 per share?
A. Cash $4,500 Common Stock 4,500
B. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess of Par3,500
C. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess ofStated Value 3,500
D. Common Stock $4,500 Cash 4,500

26) Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1par value common stock. This stock was sold later at a sellingprice of $6 per share. The entry to record the sale includes a
A. credit to Paid-In Capital from Treasury Stock for $9,000
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000

27) Which of the following is a fundamental factor in having aneffective, ethical corporate culture?
A. Efficient oversight by the company’s Board of Directors
B. Workpla
ce ethics
C. Code of conduct
D. Ethics management programs

28) Two individuals at a retail store work the same cash register.You evaluate this situation as
A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification

29) The Sarbanes-Oxley Act imposed which new penalty forexecutives?
A. Fines
B. Suspension
C. Criminal prosecution for executives
D. Return of ill-gotten gains

30) The Sarbanes-Oxley Act requires that all publicly tradedcompanies maintain a system of internal controls. Internal controlscan be defined as a plan to
A. safeguard assets
B. monitor balance sheets
C. control liabilities
D. evaluate capital stock

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