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35_Accounting MCQs_12 Jan

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Question;1. On July 1, 2010, a firm purchased a 1-year;insurance policy for $1,800 and paid the full premium in advance. The insurance;expense associated with this policy for 2010 is (Points: 5);$1,800.;$1,050.;$900.;$600.;Question 2.2. A firm purchased;equipment for $6,000 on credit and issued a 120-day note bearing interest at 9;percent a year as evidence of the debt. To record this transaction, the;accountant would debit (Points: 5);Equipment for $6,180, credit Interest;Expense for $180, and credit Notes Payable for $6,000.;Equipment for $6,000 and credit Notes;Payable for $6,000.;Equipment for $6,000, debit Interest;Expense for $180, and credit Notes Payable for $6,180.;Equipment for $6,000 and credit;Accounts Payable for $6,000.;Question 3. 3. Compute the maturity;value of a 90-day, 10 percent note with a face value of $1,000. (Points: 5);Question 4. 4. Determine the account;and amount to be debited and the account and amount to be credited for the;following adjustment. Equipment purchased for $104,000 on January 3, 2011, has;an estimated life of 5 years and an estimated salvage value of $9,000. The firm;uses the straight-line method of depreciation. Determine the adjustment for the;month ended January 31, 2011. (Points: 5);Question 5.5. Allowance for Doubtful;Accounts has a credit balance of $1,000 immediately before the write-off of a;$300 account receivable. The credit balance of Allowance for Doubtful Accounts;immediately after the write-off is (Points: 5);$1,300.;$1,000.;$300.;$700.;Question 6.6. When a company issues a;promissory note, the accountant records an entry that includes a credit to Note;Payable for the (Points: 5);maturity value of the note.;face value less the interest that;will accrue.;face value of the note plus the;interest that will accrue.;face value of the note.;Question 7.7. The amount of principal;and interest that must be paid when a note comes due is the (Points: 5);Maturity Value;Face Value;Loan Value;Historic Value;Question 8.8. The four assumptions;financial statement users should be able to assume that preparers of the;statements have made in preparing the statements that are listed by the FASB's;conceptual framework are (Points: 5);separate economic entity, going;concern, monetary unit, and periodicity of income.;conservatism, matching principle;revenue recognition principle, and periodicity of income.;conservatism, cost-benefit test, full;disclosure principal, and industry practice constraint.;historical cost basis, materiality;realization, and transparency.;Question 9.9. The total that must be;paid when a note becomes due is known as the (Points: 5);maturity value.;note value.;principle.;face value.;Question 10.10. Notes Payable and;Notes Receivable are generally recorded on the balance sheet in the (Points: 5);Current liabiity or current assets;section.;Income section.;Long-term liability or long-term;asset section.;Owner's Equity section.;Question 11.11. A one-month note;dated October 15, would be due on November (Points: 5);17.;15.;14.;16.;Question 12.12. firm reported sales;of $300,000 during the year and has a balance of $20,000 in its Accounts;Receivable account at year-end. Prior to adjustment, Allowance for Doubtful;Accounts has a credit balance of $300. The firm estimated its losses from;uncollectible accounts to be one-half of 1 percent of sales. The entry to;record the estimated losses from uncollectible accounts will include a credit;to Allowance for Doubtful Accounts for (Points: 5);$1,500.;$3,000.;$1,200.;$1,800.;Question 13.13. With the accrual;basis of accounting, it is appropriate to recognize revenue from a credit sale;(Points: 5);on the date the account is collected;in full.;each time a payment on an account;balance is received.;on the date of the sale.;either on the date of the sale or;when the amount of the sale is collected.;Question 14. 14. At the end of the;current year, the trial balance of Kerry Hardware included the accounts and;balances shown below. Credit sales were $7,000,000. Returns and allowances on;these sales were $55,000. Assume that the firm bases its estimate of the loss;from uncollectible accounts on 0.4 percent of net credit sales.;Accounts Receivable $650,000 Dr.;Allowance for Doubtful Accounts;$4,500 Cr.;What is the estimated loss from;uncollectible accounts for the current year?;What amount will be used in the;adjusting entry for the estimated loss from uncollectible accounts?;(Points: 5);Question 15.15. How much interest;will accrue on a $20,000 face value, 60-day note that bears interest at 9;percent a year? (Points: 5);$450.;$900.;$300.;$1,800.;Question 16.16. Which of the;following statements is not correct? (Points: 5);The entry to record the issuance of a;promissory note includes a credit to Interest Payable for the amount of;interest that will accrue on the note until it is paid at maturity.;The Notes Payable account is always;debited or credited for the face value of a note.;The entry to record the issuance of a;promissory note includes a credit to the Notes Payable account.;All of these statements are correct.;Question 17. 17. Compute the amount;of interest owed on a 3-month, 7 percent note for $12,000. (Points: 5);Question 18.18. Depreciating;equipment over its useful life is an example of (Points: 5);applying the matching principle.;applying the realization principle.;following the objectivity assumption.;applying the conservatism convention.;Question 19. 19. Compute the amount;of interest owed on a 60-day, 8 percent note for $9,000. (Points: 5);Question 20.20. The adjusting entry;to record estimated losses from uncollectible accounts consists of a debit to;(Points: 5);Accounts Receivable and a credit to;Allowance for Doubtful Accounts.;Uncollectible Accounts Expense and a;credit to Allowance for Doubtful Accounts.;Allowance for Doubtful Accounts and a;credit to Accounts Receivable.;Uncollectible Accounts Expense and a;credit to Accounts Receivable.;Question 21.21. A 30-day note dated;October 15, would be due on November (Points: 5);15.;17.;16.;14.;Question 22.22. On January 2, 2011, a;firm purchased equipment for $8,500. Depreciation expense for 2011, given the;straight-line method, a 5-year useful life, and a salvage value of $1,500, is;(Points: 5);$1,200.;$1,500.;$1,400.;$1,700.;Question 23.23. On December 31, prior;to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An;aging analysis of the accounts receivable produces an estimate of $1,000 of;probable losses from uncollectible accounts. The adjusting entry needed to;record the estimated losses from uncollectible accounts is made for (Points: 5);$800.;$1,000.;$200.;$1,200.;Question 24.24. The Financial;Accounting Standards Board is (Points: 5);a branch of the SEC.;a branch of the IRS.;an independent organization.;a branch of the AICPA.;Question 25.25. The maturity value of;a 90-day note for $4,000 that bears interest at 10 percent a year is (Points;5);$4,100.;$3,900.;$4,400.;$4,000.;Question 26.26. Financial report;users need information about (Points: 5);profits;economic resources (assets);claims against the assets;(liabilities and owner's equity);All of the above.;Question 27.27. The Financial;Accounting Standards Board is (Points: 5);an independent organization.;a branch of the IRS.;a branch of the SEC.;a branch of the AICPA.;Question 28.28. Depreciating;equipment over its useful life is an example of (Points: 6);applying the matching principle.;applying the conservatism convention.;following the objectivity assumption.;applying the realization principle.;Question 29.29. Investors and;creditors expect to receive a cash flow directly or indirectly from the;business entity (Points: 6);directly from the distribution of the;company's earnings.;indirectly through the disposition of;their interests for cash.;Both of the above.;Neither of the above.;Question 30.30. In order to ensure;that they are meaningful and useful, financial statements should be prepared;(Points: 6);on a daily basis.;on a timely basis.;in accordance with section 108 of the;Sarbarnes-Oxley Act.;using generally accepting accounting;principles (GAAP).;Question 31. 31. Determine the;account and amount to be debited and the account and amount to be credited for;the following adjustment. Equipment purchased for $104,000 on January 3, 2011;has an estimated life of 5 years and an estimated salvage value of $9,000. The;firm uses the straight-line method of depreciation. Determine the adjustment;for the month ended January 31, 2011. (Points: 5);Question 32.32. The adjusting entry;to record accrued interest on a note payable requires a debit to (Points: 6);Interest Expense and a credit to Cash.;Interest Income and a credit to Notes;Payable.;Interest Payable and a credit to;Interest Expense.;Interest Expense and a credit to;Interest Payable.;Question 33.33. On November 1, 2010;a firm accepted a 4-month, 10 percent note for $900 from a customer with an;overdue balance. The accrued interest recorded for this note for the year ended;December 31, 2010, is (Points: 5);$30.;$90.;$75.;$15.;Question 34.34. On May 1, 2011, a;firm purchased a 1-year insurance policy for $3,600 and paid the full premium;in advance. The insurance expense associated with this policy for 2011 is;(Points: 5);$3,600.;$2,400.;$2,100.;$1,200.;Question 35.35. Accrued expenses are;(Points: 6);paid for and recorded in one period;but not fully used until a later period.;used in one period but not paid for;or recorded until a later period.;paid for, recorded, and used in one;period.;budgeted but not paid for or used;during the period.

 

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