AIS100_Practice_Exam_2 - 1 AIS 100 PRACTICE EXAM 2 I....

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1 AIS 100 PRACTICE EXAM 2 I. Multiple Choice (50 points) 1. The book value of a plant asset is the difference between the a) Cost of the asset and the yearly depreciation expense b) Replacement cost of the asset and its historical cost c) Proceeds received from the sale of the asset and its original cost d) Purchase price of the asset and the sum of the yearly depreciation to date 2. N/A 3. If a company fails to record the adjusting entry for estimated uncollectible accounts receivable at the end of the year, a) Total assets are understated b) Total revenues are understated c) Total Receivables are understated d) Net income is overstated 4. A company writes a check for $167 but incorrectly records the amount in its ledger as $176. On the bank reconciliation, the error should be a) Subtracted from the balance per bank b) Added to the balance per bank c) Added to the balance per books d) Subtracted from the balance per books 5. N/A 6. Meghan Macramé Company incurred $300,000 of research and development costs in its laboratory to develop a new macramé weaver. The company spent $40,000 in legal fees for a patent granted on January 2, 2007. On July 31, 2007, Meghan Macramé paid $30,000 for legal fees in a successful defense of the patent. Assuming the company doesn’t adjust for amortization until the end of the calendar year, what is the total amount that should be debited to Patents through July 31, 2007? a) $330,000 b) $30,000 c) $370,000 d) $70,000 7. N/A 8. A corporation issues $100,000, 10%, 5-year bonds on January 1, 2007, for $95,800. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2007’s adjusting entry is a) $10,000 b) $840 c) $9,160 d) $10,840 9. The financial statements of the Bolton Manufacturing Company reports net credit sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the receivables turnover ratio for Bolton? a) 12.5 times b) 16.7 times c) 10.0 times d) 7.0 times
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2 10. The financial statements of the ABC Company reports net credit sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? a) 50.00 days b) 40.00 days c) 54.75 days d) 80.00 days 11. On April 5, Corey’s Storyhouse accepted a VISA card for a $400 purchase. VISA charges a 2% service fee. The entry to record this transaction would include a a) Debit to Service Charge Expense of $8 b) Credit to Cash of $392 c) Debit to Cash of $400 d) Credit to Service Charge Payable of $8 12. Chrudimsky Chrome Suppliers has the following inventory transactions occur during 2006: Units Cost/unit 2/1/07 Purchase 54 $45 3/14/07 Purchase 93 $47 5/1/07 Purchase 66 $49 The company sold 153 units at $63 each and has an income tax rate of 30%. What is Chrudimsky’s gross
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This note was uploaded on 04/01/2008 for the course ACCT 100 taught by Professor Punke during the Fall '08 term at University of Wisconsin Colleges Online.

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AIS100_Practice_Exam_2 - 1 AIS 100 PRACTICE EXAM 2 I....

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