Acc 291 Final Exam

ACC 291 Final Exam

MULTIPLE CHOICE

1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

Bad Debts Expense 12,000

Allowance for Doubtful Accounts 12,000

2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?

$18,000

4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that

do not have physical substance

5) The book value of an asset is equal to the

asset's cost less accumulated depreciation.

6) Gains on an exchange of plant assets that has commercial substance are

recognized immediately

7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

Revenue Expenditures

8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

capital expenditures

9) When an interest-bearing note matures, the balance in the Notes Payable account is

equal to the total amount repaid by the borrower

10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be

$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 borrowing if the income tax rate is 30%?

$ 210,000

12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?

Long-term debt, $150,000; 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 the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is

$25,946

14) When the effective-interest method of bond discount amortization is used to amortize bond premium or discount the periodic amortization will be?

Increase if the bonds were issued at either a discount or premium

15) If a corporation has only one class of stock, it is referred to as

Common Stock

16) Capital stock to which the charter has assigned a value per share is called

par value stock

17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value