Practice Exam with Solutions

Practice Exam with Solutions - Practice Exam 2 Name PENN ID...

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Practice Exam 2 1 Name: PENN ID: __________________________ Recitation Section: __________________________ ACCOUNTING 101, PRACTICE EXAM #2 Instructions: 1. There are 17 numbered pages in this booklet (including a cover page and 2 blank pages at the end). Make sure you have all the pages before you begin. 2. Please print your name and student number at the top of this page AND on all subsequent pages. 3. This exam has 120 total points. Each question carries 3 points. No partial credit will be awarded. You have 120 minutes to complete the exam. So, please budget your time accordingly. 4. If any part of the statement is FALSE the entire statement is FALSE. 5. In the interest of fairness to all students, NO questions will be answered during the exam. If you think a question cannot be unambiguously answered with the information provided, you can choose “none of the above”. 6. The exam is closed book and the use of a laptop computer is prohibited. You are permitted to use ONE double-sided 8 ½ x 11 inch reference sheet. You are also permitted to use a calculator. 7. Exams written in pencil will not be considered for a regrade. Use a pen if you think you might submit your exam for a regrade request.
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Practice Exam 2 2 True and False: 1. If Dell Computer has 10,000 Pentium disks in stock at a cost of $300 per chip when they can be purchased at a replacement cost of $250 each. Dell will recognize this decline in cost when the chips are sold as part of their computers. TRUE / FALSE 2. An entry to write off an uncollectible account does not change the net realizable value of accounts receivable. TRUE / FALSE 3. Capitalizing interest for self-constructed property rather than recording it as an expense decreases the interest coverage ratio. TRUE / FALSE 4. In a period of rising costs, the LIFO Reserve account would be deducted from the ending inventory under LIFO costing to convert it to ending inventory under FIFO costing. TRUE / FALSE 5. Investments with original maturities of up to six months qualify as cash equivalents. TRUE / FALSE 6. The payment of interest on a note payable is a cash flow from financing activity. TRUE / FALSE 7. If sales revenue was $1,800,000 and accounts receivable decreased $40,000 while unearned revenue increased $10,000 during the year, then cash collected from customers equals $1,840,000. TRUE / FALSE 8. Using a shorter estimated useful life for their fixed assets allows a company to reduce reported net income over the fixed assets' useful lives. However, early disposal of these assets could create reported gains thereby boosting income upon their disposal. TRUE / FALSE 9. Only long-term investments in other companies' stocks and bonds would be disclosed in the investing activities section, while short-term investments would be in the operating activities section. TRUE / FALSE
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Practice Exam 2 3 10. Cost of storing finished units in a separate warehouse will be added to the finished goods inventory account.
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