Download Exam Mid-Term Summer 2006 Accounting 2301

Exam Mid-Term
Accounting 2301
Summer 2006
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The left side of a T-account is always the:
1) _______
A) credit side
B) debit side
C) increase side
D) decrease side
2) All amounts paid to acquire a plant asset and to get it ready for its intended use are referred to
as:
A) salvage value
B) the cost of an asset
C) capital expenditures
D) immediate expenses
2) _______
3) A business purchases a truck by signing a note payable to the seller. Such a transaction would
include a:
A) debit to an expense account
B) debit to Note Payable
C) credit to Note Payable
D) credit to Truck
3) _______
4) The accounting transaction to record payment of an electric bill would include a:
A) debit to Cash
B) credit to Accounts Payable
C) debit to Accounts Receivable
D) debit to Utilities Expense
4) _______
5) An expense incurred in 2005 is not paid until 2006. Using the accrual basis of accounting, the
expense should appear on:
A) the 2005 income statement
B) the 2006 income statement
C) neither the 2005 nor the 2006 income statement
D) both the 2005 and 2006 income statements
5) _______
6) On December 15, 2005, a company receives an order from a customer for services to be
performed on December 28, 2005. Due to a backlog of orders, the company does not perform the
services until January 3, 2006. The customer pays for the services on January 6, 2006. The
matching principle requires the revenue to be recorded by the company on:
A) January 3, 2006
B) December 15, 2005
C) December 28, 2005
D) January 6, 2006
6) _______
7) A company using the accrual basis of accounting pays $9,000 for a television advertising
campaign. Commercials will run evenly in December, January, and February. How much
expense will be reported on an income statement prepared for the month of December?
A) $0
B) $3,000
C) $6,000
D) $9,000
7) _______
8) Thompson Company executives are planning a $2 million advertising campaign. The expense of
this advertising campaign should be recognized when:
A) planning for the campaign is complete
B) commercials are filmed
C) cash is paid to the television stations which will run the commercials
D) commercials are broadcast
8) _______
9) Marketable securities are classified as:
A) tradable securities, available-for-sale purchase
B) trading securities, available-for-sale purchase, and held-to-maturity securities
C) tradable securities, available-for-sale securities, and held-to-maturity securities
D) trading securities, available-for-sale securities, and held-to-maturity securities
9) _______
10) Trading securities:
A) must be equity securities
B) may be debt securities or equity securities
C) must be debt securities
D) represent Accounts Receivable and Notes Receivable on the balance sheet
10) ______
11) Trading securities purchased for $200,000 were valued at $206,000 at the end of the year. The
adjusting entry to record this difference included a credit to:
A) Short-term Investments
B) Unrealized Gain on Investments
C) Retained Earnings
D) No adjusting entry is required.
11) ______
12) The two accepted methods of recording bad debts are the:
A) direct write-off method and the percentage-of-sales method
B) receivables method and the aging method
C) allowance method and the direct write-off method
D) allowance method and the aging method
12) ______
13) A year-end review of accounts receivable and estimated uncollectible percentages revealed the
following:
13) ______
1-30 days
31-60 days
61-90 days
$24,000
$800
$500
2%
10%
20%
Amounts over 90 days past due are written off. The normal balance in Allowance for
Uncollectible Accounts was $300. The uncollectible accounts expense for the year was:
A) $300
B) $360
C) $660
D) $960
14) TG Industries reported the following:
Net Sales
Cost of Goods Sold
Operating expenses
14) ______
$100,000
45,000
20,000
The gross profit percentage is:
A) 25%
B) 45%
C) 65%
D) 55%
15) Wiley Company's ending inventory (at cost) was greater than the market value of the ending
inventory. What adjusting entry is required to account for this difference?
A) Merchandise Inventory
B) Cost of Goods Sold
Cost of Goods Sold
Merchandise Inventory
C) Cost of Goods Sold
D) No adjusting entry is required.
Sales
15) ______
16) The use of the FIFO method increases taxable income when:
A) prices are increasing
B) prices are constant
C) prices are declining
D) FIFO will always yield the lowest possible taxes.
16) ______
17) A company purchased merchandise inventory on credit for $300 per unit, and later sold the
inventory for $500 per unit. The journal entry to record the purchase of inventory included a
debit to:
A) Merchandise Inventory
B) Accounts Receivable
C) Accounts Payable
D) Cost of Goods Sold
17) ______
18) Which of the following expenses is most closely associated with plant assets?
A) depreciation
B) amortization
C) depletion
D) accumulation
18) ______
19) The cost of removing an old building to make land suitable for its intended use is charged to:
A) land
B) building expense
C) land improvements
D) land improvements expense
19) ______
20) Which of the following costs associated with a delivery van should be capitalized?
I. The van is modified for a specific use.
II. The van's transmission is completely overhauled.
III. The van is repainted.
A) I and III
B) I and II
C) II and III
D) All of these answers are correct.
20) ______
21) Repairs made to equipment as part of a yearly maintenance project would be recorded in the
journal by:
A) debiting Accumulated Depreciation
B) debiting Repair Expense
C) debiting Equipment
D) debiting Depreciation Expense
21) ______
22) Which of the following statements regarding accounts is false?
A) Revenue is increased by a credit and an expense is increased by a debit.
B) An asset is increased by a debit and decreased by a credit.
C) Dividends are increased by credits and decreased by debits.
D) A liability is decreased by a debit and increased by a credit.
22) ______
23) The debit side of the account always indicates:
A) amount received in the transaction
C) amount of increase in an account
23) ______
B) amount given in the transaction
D) amount of decrease in an account
24) An accrual refers to an event:
A) where the asset is recorded after the cash settlement
B) where the liability is recorded after the cash settlement
C) where the expense or revenue is recorded after the cash settlement
D) where the expense or revenue is recorded before the cash settlement
24) ______
25) If a company is using a perpetual inventory system, the balance in its inventory account threequarters of the way through an accounting period would be equal to:
A) the inventory on hand at the beginning of the period
B) the total of the beginning inventory plus goods purchased during the accounting period
C) the amount of goods purchased during the period
D) the inventory on hand at the beginning of the period plus goods purchased during the
accounting period minus goods sold during the period
25) ______
26) Prepare a bank reconciliation dated December 31, 2007, for Jae's Juice and Java based on the following
information:
∙
Balance per bank statement is $26,222.
∙
Balance per books is $24,641.
∙
The December bank statement indicated a service charge of $35.
∙
Check #1169 for $730 and Check #1183 for $2,150 were not returned with the bank statement.
∙
A $3,472 deposit made on December 30 did not appear on the bank statement.
∙
A bank debit memo indicated an NSF check written by Bill Bush to Jacque's Espresso and Books on
December 11, 2007, for $644.
∙
A bank credit memo indicated a bank collection of $2,800 and interest revenue of $52 on December
15, 2007.
Answer:
Balance per Bank:
Additions:
$26,222
Deductions:
________
True bank balance:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Balance per Books:
Additions:
$24,641
Deductions:
________
True book balance:
1) B
2) B
3) C
4) D
5) A
6) A
7) B
8) D
9) D
10) B
11) B
12) C
13) B
14) D
15) B
16) A
17) A
18) A
19) A
20) B
21) B
22) C
23) A
24) D
25) D
26)
Jae's Juice and Java
Bank Reconciliation
December 31, 2007
Bank
Bala
nce
Add:
De
posit
in
trans
it
3,4
72
Ded
uct:
Ou
tstan
ding
chec
ks
#
1169
#
1183
Adju
sted
Bala
nce
$26,222
Book Balance
Add:
Bank collection
Interest revenue
$24,641
2,800
52
Deduct:
NSF check
(730)
Service charge
(644)
(35)
( 2,150)
$26,814
Adjusted Balance
$26,814