ACC 281 FINAL EXAM REVIEW (Questions & Answers)

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Which of the following is not on of the three forms of business organization? A) Proprietorships B) Corporations C) Investors D) Partnerships The right to receive money in the future is called a(... n) A) account payable B) account receivable C) liability D) revenue. Debts and obligations of a business are referred to as A) assets B) equities C) liabilities D) expenses. Which of the following is not a liability? A) Unearned Service Revenue C) Accounts Receivable B) Accounts Payable D) Interest Payable Henson Company began the year with retained earnings of $330,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year? A) $490,000 B) $410,000 C) $790,000 D) $450,000 Current Assets Formula N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets? A) $2,695,000 B) $1,255,000 C) $1,745,000 D) $3,305,000 The left side of an account A) is the correct side. B) reflects all transactions for the accounting period. C) shows all the balances of the accounts in the system. D) is the debit side. In the first month of operations, the total of the debit entries to the Cash account amounted to $1,400 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a A) $800 credit balance. B) $1,400 debit balance. C) $600 debit balance. D) $600 credit balance. Winrow Company showed the following balances at the end of its first year: Cash(11,000) Prepaid insurance(500) Accounts receivable(2,500) Accounts payable(2,000) Notes payable(3,000) Common stock(5,000) Dividends(500) Revenues(17,000) Expenses (12,500) What did Winrow Company show as total credits on its trial balance? A) $27,500 B) $27,000 C) $26,500 D) $28,000 At September 1, 2014, Baxter Inc. reported Retained Earnings of $282,000. During the month, Baxter generated revenues of $40,000, incurred expenses of $24,000, purchased equipment for $10,000 and paid dividends of $4,000. What is the balance in Retained Earnings at September 30, 2014? A) $282,000 debit B) $16,000 credit C) $284,000 credit D) $294,000 credit The Accounts Receivable account has a beginning balance of $52,000 and an ending balance of $69,000. If $42,000 was sold on account during the year, what were the total collections on account? A) $25,000 B) $59,000 C) $69,000 D) $79,000 A deposit made by a company will appear on the bank statement as a A) decrease. B) increase. C) debit memorandum. D) credit memorandum. Which of the following would be deducted from the balance per books on a bank reconciliation? A) Outstanding checks. B) Deposits in transit. C) Notes collected by the bank. D) Service charges. Which of the following would be added to the balance per books on a bank reconciliation? A) Outstanding checks. B) Deposits in transit. C) Notes collected by the bank. D) NSF check. LIFO Inventory Method Average Cost Method The account Allowance for Doubtful Accounts is classified as a(n) A) liability. B) contra account of Bad Debt Expense. C) expense. D) contra account to Accounts Receivable. Using the allowance method, the uncollectible accounts for the year are estimated to be $50,000. If the balance for the Allowance for Doubtful Accounts is $9,000 before adjustment, what is the balance after adjustment? A) $9,000 B) $41,000 C) $50,000 D) $59,000 A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at A) $385,000. B) $350,000. C) $375,000. D) $410,000. The book value of an asset is equal to the A) asset's fair value less its historical cost. B) blue book value relied on by secondary markets. C) replacement cost of the asset. D) asset's cost less accumulated depreciation. A gain or loss on disposal of a plant asset is determined by comparing the A) replacement cost of the asset with the asset's original cost. B) book value of the asset with the asset's original cost. C) original cost of the asset with the proceeds received from its sale. D) book value of the asset with the proceeds received from its sale. If disposal of a plant asset occurs during the year, depreciation is A) not recorded for the year. B) recorded for the whole year. C) recorded for the fraction of the year to the date of the disposal. D) not recorded if the asset is scrapped. The interest charged on a $350,000 note payable, at the rate of 6%, on a 60-day note would be A) $21,000. B) $10,500. C) $5,250. D) $3,500. Unearned Rent Revenue is A) a contra account to Rent Revenue. B) a revenue account. C) reported as a current liability. D) decreased when rent is received in advance. A retailer that collects sales taxes is acting as an agent for the A) wholesaler. B) customer. C) taxing authority. D) chamber of commerce. A company purchased land for $84,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1,200. Under the historical cost principle, the cost of land would be recorded at A) $94,800 B) $84,000 C) $89,800 D) $96,000 The book value of an asset is equal to the A) asset's fair value less its historical cost. B) blue book value relied on by secondary markets C) replacement cost of the asset D) asset's cost less accumulated deprecation Equipment was purchased for $68,000 on January 1, 2013. Freight charges amounted to $2,800 and there was a cost of $8,000 for building foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2014, if the straight-line method of depreciation is used? A) $26,720 B) $13,360 C) $11,440 D) $22,880 Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is A) $144,000 B) $120,000 C) $40,000 D) $24,000 A gain or loss on disposal of a plant asset is determined by comparing the A) replacement cost of the asset with the asset's original cost B) book value of the asset with the asset's original cost C) original cost of the asset with the proceeds received from its sale D) book value of the asset with the proceeds received from its sale The calculation of depreciation using the declining-balance method A) ignores salvage value in determining the amount to which a constant rate is applied B) multiplies a constant percentage times the previous year's depreciation expense C) yields an increasing depreciation expense each period D) multiplies a declining percentage times a constant book value Sales taxes collected by a retailer are reported as A) contingent liabilities B) revenues C) expenses D) current liabilities Tina's Boutique has total receipts for the month of $24,255 including sales taxes. If the sales tax rate is 5%, what are Tina's sales for the month? A) $23,043 B) $23,100 C) $24,255 D) It cannot be determined Bonds with a face value of $300,000 and a quoted price of 102¼ have a selling price of A) $360,675 B) $306,075 C) $300,675 D) $306,750 Par value A) represents what a share of stock is worth B) represents the original selling price for a share of stock C) is established for a share of stock after it is issued D) is the value assigned per share in the corporate charter The amount of stock that may be issues according to the corporation's charter is referred to as the A) authorized stock B) issued stock C) unissued stock D) outstanding stock If common stock is issued for an amount greater than par value, the excess should be credited to A) Cash B) Retained Earnings C) Paid-in Capital in Excess of Par Value D) Legal Capital The following data is available for BOX Corporation at December 31, 2014: Common stock, par $10 (authorized 30,000 shares) 250,000 Treasury stock (at cost $15 per share) $1,200 Based on the data, how many shared of common stock are outstanding A) 30,000 B) 25,000 C) 29,920 D) 24,920 Treasury Stock is a(n) A) contra assets account B) retained earning account C) asset account D) contra stockholder's equity account What is the total stockholders' equity based on the following account balances? Common Stock (1,800,000) Paid-In Capital in Excess of Par (120,000) Retained Earning (570,000) Treasury Stock (60,000) A) $2,190,000 B) $2,430,000 C) $2,550,000 D) $1,680,000 Nance Corporation's December 31, 2014 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 30,000 shares authorized; 15,000 shares issued ($300,000) Common stock, $10 par value, 3,000,000 shares authorized; 1,950,000 shares issued, 1,920,000 shares outstanding ($19,500,000) Paid-in capital in excess of par value - preferred stock ($60,000) Paid-in capital in excess of par value - common stock ($27,000,000) Retained earnings ($7,650,000) Treasury stock (30,000 shares) ($630,000) Nance's total paid-in capital was A) $46,860,000 B) $47,490,000 C) $46,230,000 D) $27,060,000 [Show More]

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