2024 – Question 1 The Two 2 Bases for Estimating the Amount of Uncollectible Accounts are the

Question 1  

The Two (2) Bases for Estimating the Amount of Uncollectible Accounts are the:

 

Answer  

A.Percentage of Total Assets & Percentage of Sales. 

B.Percentage of Receivables & Percentage of Total Revenue. 

C.Percentage of Current Assets & Percentage of Sales. 

D.Percentage of Receivables & Percentage of Sales.

 

Question 2  

When Writing Off Bad Debts, Accountants Prefer:

 

Answer  

A.The Direct Method of Writing Off Accounts Receivables because it is more objective. 

B.The Estimated Method of Writing Off Accounts Receivable because it “matches” bad debts expense with the period in which the sales revenue was recorded. 

C.Not to Write Off Accounts Receivable because it represents money permanently owed to the company by its credit customers until it is paid. 

D.To Let the Firm’s Owner Decide whether to write off bad debts & which method to use.

 

Question 3 

When a Company “Factors” its Accounts Receivable, it:

 

Answer  

A.Hires a collection agency to collect its overdue accounts receivable. 

B.Uses one of several methods to estimate the amount of bad debts. 

C.Writes off known deadbeats who will never pay the amount they owe. 

D.Sells its Accounts Receivable to a bank or finance company for immediate cash.  The bank or finance company then assumes responsibility for collecting the receivables.

 

Question 4  

Which of the follows Assets Does NOT Decline in Service Potential (Depreciate) over the course of its Useful Life. 

 

Answer  

A.Land.  

B.Delivery Truck.  

C.Furnishings & Fixtures  

D.Machinery & Equipment. 

 

Question 5  

Which of the following is NOT a Factor in Computing the Amount of Periodic Depreciation on Plant Assets?

 

Answer  

A.Salvage Value of the Asset. 

B.Original Cost of the Asset.

C.Estimated Useful Life of the Asset. 

D.Cost Needed to Replace the Asset.

 

Question 6  

The Four (4) Subdivisions (Categories) of Plant Assets are:

 

Answer  

A.Furnishings & Fixtures, Land, Buildings, & Equipment. 

B.Intangibles, Land, Buildings, & Equipment. 

C.Land, Land Improvements, Buildings, & Equipment. 

D.Property, Plant, Equipment, & Land.

 

Question 7  

If the Adjusting Entry for Recording Depreciation on Equipment was NOT Recorded, then:

 

Answer  

A.Fixed Assets would be Understated & Expenses would be Overstated. 

B.Current Assets would be Overstated & Expenses would be Understated. 

C.Fixed Assets would be Overstated & Expenses would be Understated. 

D.Intangible Assets would be Overstated & Expenses would be Understated.

 

Question 8  

The Double Declining Balance Method of Computing Depreciation results in a(n):

 

Answer  

A.Decreasing Amount of Depreciation Expense each period. 

B.Increasing Amount of Depreciation Expense each period. 

C.Declining Percentage Rate of Depreciation Expense each period. 

D.Constant Amount of Depreciation Expense each period.

 

Question 9  

When an Ole Plant Asset is Exchanged for a Similar New Plant Asset & a LOSS on the Disposal Occurs, the Loss is: 

RECOGNIZED IMMEDIATELY……….DEFERRED

 

Answer  

A……………… Yes ………………………………. No 

B……………… Yes ……………………………….Yes 

C……………… No ……………………………….. No 

D……………… No ………………………………..Yes

 

Question 10  

Which of the following is NOT an Intangible Asset?

 

Answer  

A.Patents. 

B.Unearned Revenue. 

C.Copyrights. 

D.Goodwill.

 

Question 11  

Federal Unemployment Taxes are Paid by:

 

Answer  

A.The Government. 

B.Employers only. 

C.Both Employees & Employers. 

D.Employees only.

 

Question 12  

Companies involved in Interstate Commerce are Required to Compute Overtime at:

 

Answer  

A.1.25 times the workers regular hourly wage rate. 

B.The worker’s regular hourly wage rate. 

C.2 times the workers regular hourly wage rate. 

D.1.5 times the workers regular hourly wage rate.

 

Question 13  

A Cruise Line Sells 1,000 Tickets for $900 each on one of its Ships for a 5 day Caribbean Cruise in Two Months.  (NOTE: All Ticket Buyers Paid for their Tickets with a Credit Card). The General Journal Entry to Record the Sale of the Tickets is:

 

Answer  

A.Cash ………………………………………… $90,000

      Unearned Ticket Revenue ………………………….$90,000 

B.Unearned Ticket Revenue …………… $90,000

      Cash ……………………………………………………… $90,000 

C.Unearned Ticket Revenue …………… $90,000

      Accounts Receivable ………………………………..$90,000  

D.Accounts Receivable ………………….. $90,000

      Unearned Ticket Revenue ………………………… $90,000

 

Question 14  

The Adjusting Entry for the above transaction After the Cruise takes place is:

 

Answer  

A.Unearned Ticket Revenue ………………… $90,000

      Ticket Revenue ……………………………………………. $90,000 

B.Cash ………………………………………………. $90,000

      Ticket Revenue ……………………………………………. $90,000 

C.Cash ………………………………………………. $90,000

      Unearned Ticket Revenue …………………………….. $90,000  

D.Ticket Revenue ……………………………….. $90,000

      Unearned Ticket Revenue ……………………………… $90,000 

 

Question 15  

An Appliance Manufacturer Estimated the Warranty costs on its Sales of Appliances for Year 1 to be $50,000.  The Journal Entry to Record the Estiamted Warranty Costs for Year 1 is:

 

Answer  

A.Warranty Expense ………………… $50,000

     Estimated Warranty Liability ……………….. $50,000  

B.Repair Parts …………………………. $50,000

     Estimated Warranty Liability ………………….$50,000 

C. Estimated Warranty Liability ….. $50,000 

     Repair Parts ……………………………………… $50,000 

D.Estimated Warranty Liability …… $50,000

     Warranty Expense ………………………/……. $50,000

 

Question 16  

The Actual Repair Costs (Parts) Used in Year 2 to Honor its Warranty Costs in the Previous Question was $30,000.  The Journal Entry to Record the Actual Repair Costs in Year 2 is:

 

Answer  

A.Estimated Warranty Liability …… $30,000

     Warranty Expense …………………………….. $30,000 

B.Estimated Warranty Liability …… $30,000  

     Repair Parts ……………………………………… $30,000 

C.Warranty Expense ………………… $30,000

     Estimated Warranty Liability ……………….. $30,000  

D.Repair Parts …………………………. $30,000

     Estimated Warranty Liability …………………$30,000

 

Question 17   

 

The cost of natural resources such as oil wells, mineral deposits, & timber that are extracted during the period. It is computed using the units of production method of depreciation. 

 

A tax withheld from employee’s earnings which is matched by the employer. It consists of two parts: Social Security for retirement benefits & Medicare for health care benefits.

 

An expenditure that provides benefits in future periods. Its cost is capitalized & appears on the Balance Sheet as an asset. EX.: A major improvement of equipment which extends its useful life & increases its productivity.

 

The process of systematically writing off the cost of an intangible asset as an expense over its estimated useful life. The straight line method of depreciation is used.

 

The accounting procedure off writing of bad debts only after they have been determined to be uncollectible.  It violates the accounting principle of matching expenses with revenues & is not acceptable for financial accounting reporting purposes. 

 

The assumption that unless there is evidence to the contrary (like a bankruptcy filing), the firm is believed to be viable & will continue its operations in the foreseeable future.

 

An expenditure that does not provide material benefits in the future. Its cost appears on the current Income Statement as an expense. EX.: Research and development costs are written off in the period in which they incurred. 

 

A tax levied by the federal government on employers. It is paid into a fund designed to provide financial assistance to workers who have been laid off and are temporarily out of work.

 

The assumption that if an item is an immaterial amount & its alternative treatment would not impact decision making, a firm does not have to follow GAAP, & it could expense small inexpensive assets rather than capitalize & depreciate them.

 

An obligation to make a future payment if, & only if, a certain event actually occurs. EX.: A company may have to pay damages if it loses a product liability lawsuit. If the potential liability is probable & can be reasonably estimated, it should be disclosed in the financial statement footnotes.

 

The accounting procedure of estimating the amount of uncollectible accounts each accounting period. The percentage of sales basis or percentage of aged receivables basis may be used to make the estimate of the amount of bad debts. 

 

The premium paid by a company when acquiring another company that is over & above the fair market value of its tangible & intangible assets because of its superior customer base, excellent reputation, etc.

 

Answer 

A.Allowance Write-Off Method

B.Revenue Expenditures

C.Federal Unemployment Taxes

D.Goodwill

E.Amortization

F.Going Concern Assumption

G.Direct Write-Off Method

H.Materiality Assumption

I.Capital Expenditures

J.Depletion

K.Contingent Liability

L.FICA Taxes

 

Question 18  

Anderson Company Estimated its Bad Debts using an Aged Accounts Receivable to be $4,400. The Allowance for Doubtful Account currently has a Credit Balance of $600. What is the Amount of the Adjusting Entry Credit to the Allowance for Doubtful Accounts? _ _ _ ($ Amount).

 

Question 19  

A Heavy Duty Truck was Purchased at a Cost of $68,000. It’s Salvage Value at the end of its Useful Life of 8 Years was Estimated to be $12,000. What is the Annual Straight Line Depreciation?  _ _ _ ($ Amount).

 

Question 20  

Ace Ltd. bought Land for $80,000 cash. The real estate broker’s Commission was $5,000 & $7,000 was Spent Demolishing an Old Building on the land before the construction of a new building could start. What is the Cost of the Land would be recorded at? _ _ _ ($ Amount).

 

Question 21  

Acme Company has Current Assets of $300,000 & Current Liabilities of $120,000. What is it’s Current Ratio? _ _ _ (Numerical Value).

 

Question 22  

Ajax Inc. sells 4,000 units of its product for $500 each. The selling price includes a one year warranty on parts. It is expected that 3% of the units will be defective & that the repair costs will average $50 per unit. What is the Estimated Warranty Costs  the company should Accrue for Expected Repairs? _ _ _ ($ Amount).

 

Question 23  

Kim Grey works for a company covered by the Fair Labor Standards Act. She Worked 44 Hours this Week & her Regular Wage Rate is $16 Per Hours. What is Kim’s Gross Wages for the Week? _ _ _ ($ Amount).