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Question (Category: Business Accounting )
Accounting MCQ - 20 questions 1. Tammy Industries inadvertently debited a $5,000 betterment as an ordinary expense. Which of the following will occur as a result of this mistake? A. The asset will be understated by $5,000. B. Net income will be overstated by $5,000. C. The asset will be overstated by $5,000. D. Retained earnings will be overstated by $5,000. 2. A patent has amortization this year of $2,300. The journal entry would be A. debit Accumulated Amortizationmdash Patent, $2,300 credit Patent, $2,300. B. debit Amortization Expensemdash Patent, $2,300 credit Accumulated Depreciationmdash Patent, $2,300. C. debit Amortization ExpensemdashPatent, $2,300 credit Patent, $2,300. D. debit Accumulated Amortizationmdash Patent, $2,300 credit Amortization Expensemdash Patent, $2,300. 3. Which of the following would indicate poor internal control over accounts receivable? A. The same person handling cash receipts also records the accounts receivable transactions. B. The person handling cash receipts passes the receipts to someone who enters them into accounts receivable. C. The person who handles accounts receivable wouldnt write off accounts as uncollectable. D. The mailroom employees open the mail and give the cash receipts to another employee. 4. Which of the following would not be considered a contingent liability? A. Mortgage payable B. Cosigning a loan C. Pending legal action D. Potential fines from the EPA 5. Brandon Company completed an aging of its accounts receivable and came up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectable accounts, how much will the credit be to the allowance for doubtful accounts if Brandon uses the estimate of aging receivables as its method of estimating uncollectable accounts? A. $4,250 B. $7,159 C. $5,525 D. $5,067 6. Brandon Company completed an aging of its accounts receivable and came up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectible accounts, how much will the credit be to the allowance for doubtful accounts if Brandon uses the percent of credit sales as its method of estimating uncollectible accounts? A. $5,525 B. $4,250 C. $5,067 D. $7,159 7. Research and development costs (RampD) are generally A. listed as quotcurrent assetsquot on the balance sheet. B. expensed and become part of the income statement. C. listed as quotlong-term assetsquot on the balance sheet. D. listed as quotother intangiblesquot on the balance sheet. 8. If the amount extracted from a coal mine was different every year for four years, you would A. recompute the depletion expense rate per unit each year. B. debit depletion expense for the same amount each year. C. use the same depletion expense rate per unit each year. D. credit accumulated depletionmdash coal mine for the same amount each year. 9. A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 360-day year? A. $38.84 B. $.38 C. $315.00 D. $354.38 10. Which of the following marketable securities are reported at market value on the balance sheet date? A. Available-for-sale and trading securities B. Held-to-maturities securities C. Trading securities D. Available-for-sale securities 11. Taylor Company has given you the following information from its aging of accounts receivable. The current amount in the allowance for doubtful accounts is a $958 credit. Current $24,400 2% uncollectible 31ndash60 days 7,350 8% uncollectible 61ndash90 days 3,380 15% uncollectible 91 and up 1,220 30% uncollectible Using this information, what is the amount of the journal entry to record the allowance for doubtful accounts? A. $1,949 B. $2,457 C. $541 D. $991 12. Which of the following would be considered a cash equivalent? A. Currency B. Checks C. Time deposits D. Money orders 13. Casey Companys bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50 and a bank collection of $760 in Casey Companys behalf. Caseys book balance should be adjusted by a total of A. +$810. B. ndash$710. C. +$760. D. +$710. 14. Which of the following would not be a liability according to FASBs definition of a liability? A. An obligation thats estimated in amount B. An obligation to provide goods or services in the future C.The signing of a three-year employment contract at a fixed annual salary D. A note payable with no specified maturity date 15. Casey Companys bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50. Caseys book balance shows outstanding checks of $5,288 and deposits in transit of $9,325. The bank-side reconciliation would show cash of A. $47,304. B. $43,267. C. $43,217. D. $,230. 16. Which marketable securities are reported at cost on the balance sheet date? A. Held-to-maturity securities B. Trading and held-to-maturity securities C. Available-for-sale securities D. Trading securities 17. Margaret is a customer of Tammy Company. The company wrote off her account of $1,200 on August End of exam 15. On October 12, she sent in a payment of $560. What will Tammy Company record first to reinstate her account? A. Debit Cash credit Accounts ReceivableMargaret. B. Debit Uncollectible Accounts Expense credit Accounts ReceivableMargaret. C. Debit Allowance for Doubtful Accounts credit Accounts ReceivableMargaret. D. Debit Accounts ReceivableMargaret credit Allowance for Doubtful Accounts. 18. Rick Company has cash of $143,000 net accounts receivable of $89,000 short-term investments of $35,000 and prepaid expenses of $40,000. It also has $50,000 in current liabilities and $80,000 in longtermliabilities. The quick ratio for Rick Company is A. 5.34. B. 4.64. C. 6.14. D. 3.34. 19. Jewell Company has current assets of $56,000 long-term assets of $135,000 current liabilities of $44,000 and long-term liabilities of $90,000. Jewell Companys debt ratio is A. 78.6%. B. 2.3%. C. 127.3%. D. 70.2%. 20. A $400,000 issue of bonds that sold for $363,000 matures on August 1, 2015. The journal entry torecord the payment of the bond on the maturity date is A. debit cash, $363,000 credit bonds payable, $363,000. B. debit bonds payable, $400,000 credit cash, $400,000. C. debit bonds payable, $363,000 credit cash, $363,000. D. debit cash, $400,000 credit bonds payable, $400,000.


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