SMC Acct 2 Test – Corporate Financial and Managerial Accounting: Section 1015

| June 11, 2016

Question
Course Home > Acct 2 pretest

Grade

Letter:

Numeric:

2

/ 2

Grading Summary

These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the “Details” section below. Date Taken: 6/28/2015

Time Spent: 21 min , 39 secs

Points Received: 86 / 86 (100%)

Question Type: # Of Questions: # Correct:

True/False 2 2

Multiple Choice 25 25

Grade Details – All Questions

Question 2. Question : Extraordinary repairs:

Student Answer: Are revenue expenditures.

Extend an asset’s useful life beyond its original estimate.

Are credited to accumulated depreciation.

Are additional costs of plants assets that do not materially increase the asset’s life.

Are expensed as incurred.

Points Received: 1 of 1

Comments:

Question 3. Question : The Income Summary account is used:

Student Answer: To adjust and update asset and liability accounts.

To close the revenue and expense accounts.

To determine the appropriate withdrawal amount.

To replace the income statement under certain circumstances.

To replace the capital account in some businesses.

Points Received: 1 of 1

Comments:

Question 4. Question : A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Which of the following entries could not be a closing entry?

Student Answer: Income Summary……….13,000

….Owner’s Capital…………………13,000

Income Summary………….75,000

….Revenues…………………………..75,000

Revenues……………….75,000

….Income Summary……………..75,000

Income Summary………62,000

…..Expenses………………………..62,000

All of the above are possible closing entries.

Points Received: 1 of 1

Comments:

Question 5. Question : Which of the following errors would cause the Balance Sheet and Statement of Owner’s Equity columns of a work sheet to be out of balance?

Student Answer: Entering an asset amount in the Income Statement Debit column.

Entering a liability amount in the Income Statement Credit column.

Entering an expense amount in the Balance Sheet and Statement of Owner’s Equity Debit column.

Entering a revenue amount in the Balance Sheet and Statement of Owner’s Equity Debit column.

Entering a liability amount in the Balance Sheet and Statement of Owner’s Equity Credit column.

Points Received: 1 of 1

Comments:

Question 6. Question : A company shows a $600 balance in Prepaid Insurance in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired insurance of $200. This adjusting entry results in:

Student Answer: $200 less in net income.

$200 more in net income.

$200 difference between the debit and credit columns of the Unadjusted Trial Balance.

$200 of prepaid insurance.

An error in the financial statements.

Points Received: 1 of 1

Comments:

Question 7. Question : Which of the following statements is incorrect?

Student Answer: Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities.

Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.

Adjusting entries can be used to record both accrued expenses and accrued revenues.

Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.

Adjusting entries affect the cash account.

Points Received: 1 of 1

Comments:

Question 8. Question : A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Student Answer: $4,600

$5,400

$6,200

$6,800

None of the above

Points Received: 1 of 1

Comments:

Question 9. Question : Accrued revenues:

Student Answer: At the end of one accounting period often result in cash receipts from customers in the next period.

At the end of one accounting period often result in cash payments in the next period.

Are also called unearned revenues.

Are listed on the balance sheet as liabilities.

Are recorded at the end of an accounting period because cash has already been received for revenues earned.

Points Received: 1 of 1

Comments:

Question 10. Question : A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

Student Answer: Understate net income by $28,000.

Overstate net income by $28,000.

Have no effect on net income.

Overstate assets by $28,000.

Understate assets by $28,000.

Points Received: 1 of 1

Comments:

Question 11. Question : Land improvements are:

Student Answer: Assets that increase the usefulness of land, and like land, are not depreciated.

Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation.

Included in the cost of the land account.

Expensed in the period incurred.

Also called basket purchases.

Points Received: 1 of 1

Comments:

Question 12. Question : The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

Student Answer: Is referred to as depreciation expense.

Is referred to as accumulated depreciation.

Is shown on the income statement of the final period.

Is only recorded when the asset is disposed of.

Is referred to as an accrued asset.

Points Received: 1 of 1

Comments:

Question 13. Question : Which of the following statements is true?

Student Answer: Owner’s capital must be closed each accounting period.

A post-closing trial balance should include only permanent accounts.

Information on the work sheet can be used in place of preparing financial statements.

By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts.

Closing entries are only necessary if errors have been made.

Points Received: 1 of 1

Comments:

Question 14. Question : The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Student Answer: Accrual basis accounting.

Operating cycle accounting.

Cash basis accounting.

Revenue recognition accounting.

Current basis accounting.

Points Received: 1 of 1

Comments:

Question 15. Question : Profit margin is defined as:

Student Answer: Revenues divided by net sales.

Net sales divided by assets.

Net income divided by net sales.

Net income divided by assets.

Net sales divided by assets.

Points Received: 1 of 1

Comments:

Question 16. Question : The matching principle requires:

Student Answer: That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user.

The use of the direct write-off method for bad debts.

The use of the allowance method of accounting for bad debts.

That bad debts be disclosed in the financial statements.

That bad debts not be written off.

Points Received: 1 of 1

Comments:

Question 17. Question : Reversing entries:

Student Answer: are necessary when journal entries have been incorrectly recorded.

are a required step in the accounting cycle.

will often result in abnormal account balances in some accounts.

are required only if the company uses accounting software to record journal entries.

must be made before preparing the post-closing trial balance.

Points Received: 1 of 1

Comments:

Question 18. Question : Depreciation:

Student Answer: Measures the decline in market value of an asset.

Measures physical deterioration of an asset.

Is the process of allocating to expense the cost of a plant asset.

Is an outflow of cash from the use of a plant asset.

Is applied to land.

Points Received: 1 of 1

Comments:

Question 19. Question : At the beginning of 2013, a company’s balance sheet reported the following balances: Total Assets = $125,000; Total Liabilities = $75,000; and Owner’s Capital = $50,000. During 2013, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner’s withdrawals for the year totaled $20,000. Assuming no other changes to owner’s capital, the balance in the owner’s capital account at the end of 2013 would be:

Student Answer: $66,000.

$86,000.

$(4,000).

$46,000.

cannot be determined from the information provided.

Instructor Explanation: Owner’s Capital = $50,000 at beginning of 2013. Add revenues

and subtract expenses and withdrawals to get ending capital.

Points Received: 10 of 10

Comments:

Question 20. Question : Which of the following assets is not depreciated?

Student Answer: Store fixtures.

Computers.

Land.

Buildings.

All of the above are depreciated.

Points Received: 1 of 1

Comments:

Question 21. Question : A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

Student Answer: $ 75.

$125.

$175.

$250.

$325. ($250 – $25 = $175)

Points Received: 5 of 5

Comments:

Question 22. Question : A company sold a machine that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the machine was $40,000. The company should recognize a:

Student Answer: $0 gain or loss.

$20,000 gain.

$20,000 gain.

$40,000 loss.

$60,000 gain.

Points Received: 10 of 10

Comments:

Question 23. Question : The materiality principle:

Student Answer: States that an amount can be ignored if its effect on financial statements is unimportant to user’s business decisions.

Requires use of the allowance method for bad debts.

Requires use of the direct write-off method.

States that bad debts not be written off.

Requires that expenses be reported in the same period as the sales they helped produce.

Points Received: 1 of 1

Comments:

Question 24. Question : A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts:

Accounts receivable……………..$355,000 debit

Allowance for uncollectible accounts $ 500 credit

Net Sales………………………….$800,000 credit

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Student Answer: $1,275

$1,775

$4,500

$4,800

$5,500 ($800,000 x .006 = $4,800)

Points Received: 1 of 1

Comments:

Question 25. Question : A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Student Answer: Debit Unpaid Salaries $600 and credit Salaries Payable $600.

Debit Salaries Expense $400 and credit Salaries Payable $400.

Debit Salaries Expense $600 and credit Salaries Payable $600.

Debit Salaries Payable $400 and credit Salaries Expense $400.

Debit Salaries Expense $400 and credit Cash $400. (2 employees x 2 days x $100/employee/day = $400)

Points Received: 1 of 1

Comments:

Order your essay today and save 30% with the discount code: ESSAYHELPOrder Now