fall05_exam2 - ACCT 2113 Financial Accounting Exam 2...

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ACCT 2113 Financial Accounting Exam 2 Multiple Choice Please write the exam ID and exam color on your Scantron. Identify the letter of the choice that best completes the statement or answers the question. Place your an- swer on the Scantron sheet. 1. On October 1, 2003, Temp Company wrote off Todd Smith’s $1,500 account. Based on Temp’s estimation, they do not expect that Mr. Smith will ever pay off any portion of his account. What effect will this write-off have on Temp’s balance sheet at the time of the write off? A) An increase to assets and decrease to liabilities. B) A decrease to assets and a decrease to owners’ equity. C) An increase to expense and a decrease to liabilities. D) No effect on the balance sheet. E) An increase to assets and increase to expense. 2. When the company re-instates a customer’s account that was previously written off, the effect of the journal entry would be a (an): A) decrease in total assets B) increase in total assets C) decrease in total liabilities D) no change to total owners’ equity E) decrease in total owners’ equity 3. On March 1, Ashe Incorporated opened their tennis lesson academy. During the remainder of the year, the academy performed 1,500 hourly lessons and charged $150 for each. Of those lessons, 150 remain unpaid. How much revenue would Ashe report for the year under both the accrual and cash basis? A) Accrual: $202,500; Cash: $202,500 B) Accrual: $202,500; Cash: $225,000 C) Accrual: $0; Cash: $225,000 D) Accrual: $225,000; Cash: $202,500 E) Accrual: $225,000; Cash: $225,000 4. On March 1 Bristol Inc. purchased two goods, X and Y. The cost of unit X was $850, and the cost of unit Y was $825. On March 31 the company had not sold the inventory, and the market value of unit X was now $875 while the market value of unit Y was $750. The journal entry on March 31 will be: A) No journal entry is necessary B) Loss 50 Inventory 50 C) COGS 50 Inventory 50 D) Loss 75 Inventory 75 E) Inventory 75 COGS 75
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5. During the year, a company has made $225,000 of credit sales, and at the end of the year the ending Accounts Re- ceivable balance was $125,000 and Allowance for Doubtful Accounts was $1,500 (debit ). If the company estim- ates bad debt expense as 5% of Accounts Receivable, the adjustment to bad debt expense at the end of the year will be: A) $6,250 B) $4,750 C) $12,750 D) $7,750 E) $11,250 6. A - Sales Discounts B - Salary Expense C - Gross Revenues D - Net Income E - Cost of Goods Sold Which of the items are included in the calculation to arrive at operating income? A) A, B, C, D, E B) C, B, D C) A, B, C, E D) A, C, E E) None are included 7. What is the balance of the Dividend account and on what statement does it appear? A)
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This note was uploaded on 04/24/2008 for the course ACCT 2113 taught by Professor Knapp during the Spring '08 term at The University of Oklahoma.

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fall05_exam2 - ACCT 2113 Financial Accounting Exam 2...

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