Mid-Term Examination Financial Accounting II Duration:90mn

Mid-term Examination
Financial Accounting II
Duration :90mn
1)Which of the following is not true regarding a credit card expense?
A) Credit card expense is not recorded by the seller.
B) Credit card expense may be classified as a selling expense.
C) Credit card expense may be classified as an administrative expense.
D) Credit card expense may be classified as a "discount" deducted from sales
to get net sales.
E) Credit card expense is a fee the seller pays for services provided by the card
company.
2)A promissory note received from a customer in exchange for an account receivable
is recorded by the payee as:
A) A cash equivalent.
B) An account receivable.
C) A note payable.
D) A short-term investment.
E) A note receivable.
3)A 90-day note issued on April 10 matures on:
A) July 12.
B) July 10.
C) July 11.
D) July 9
E) July 13.
4)A finance company or bank that purchases and takes ownership of another
company's accounts receivable is called a:
A) Factor.
B) Pledger.
C) Payer.
D) Payee.
E) Pledgee.
5)The expense recognition (matching) principle, as applied to bad debts, requires:
A) That expenses be ignored if their effect on the financial statements is
unimportant to users' business decisions.
B) The use of the allowance method of accounting for bad debts.
C) The use of the direct write-off method for bad debts.
D) That bad debts be disclosed in the financial statements.
E) That bad debts not be written off.
6)One characteristic of plant assets is that they are:
A) Used in operations.
B) Current assets.
C) Natural resources.
D) Long-term investments.
E) Intangible.
7)The relevant factors in computing depreciation do not include:
A) Market value.
B) Salvage value.
C) Useful life.
D) Depreciation method.
E) Cost.
8)Salvage value is:
A) Not a factor relevant to determining depletion.
B) A factor relevant to amortizing an intangible asset with an indefinite life.
C) A factor relevant to determining depreciation under MACRS.
D) An estimate of the asset's value at the end of its benefit period.
E) A factor relevant to determining depreciation that cannot be revised during
an asset's useful life.
9)Depreciation:
A) Measures the decline in market value of an asset.
B) Measures physical deterioration of an asset.
C) Is applied to land.
D) Is an outflow of cash from the use of a plant asset.
E) Is the process of allocating the cost of a plant asset to expense.
10)Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost
of $100,000. The asset is expected to have a salvage value of $20,000 at the end of
its five-year useful life. If the asset is depreciated on the double-declining-balance
method, the asset's book value on December 31, Year 2 will be:
A) $54,000
B) $42,000
C) $36,000
D) $16,000
E) $90,000
11)Obligations to be paid within one year or the company's operating cycle, whichever
is longer, are:
A) Current liabilities.
B) Current assets.
C) Earned revenues.
D) Operating cycle liabilities.
E) Bills.
12)Accounts payable are:
A) Estimated liabilities.
B) Long-term liabilities.
C) Amounts owed to suppliers for products and/or services purchased on
credit.
D) Not usually due on specific dates.
E) Always payable within 30 days.
13)Amounts received in advance from customers for future products or services:
A) Are revenues.
B) Are liabilities.
C) Increase income.
D) Are not allowed under GAAP.
E) Require an outlay of cash in the future.
14) If a company has advance ticket sales totaling $2,000,000 for the upcoming
football season, the receipt of cash would be journalized as:
A) Debit Sales, credit Unearned Revenue.
B) Debit Unearned Revenue, credit Sales.
C) Debit Unearned Revenue, credit Cash.
D) Debit Cash, credit Unearned Revenue.
E) Debit Cash, credit Ticket sales payable.
15)Times interest earned is calculated by:
A) Multiplying interest expense by income.
B) Dividing interest expense by income before interest expense.
C) Dividing income before interest expense and income taxes by interest
expense.
D) Multiplying interest expense by income before interest expense.
E) Dividing income before interest expense by interest expense and income
taxes.
16)A bond traded at 102½ means that:
A) The bond traded at 102.5% of its par value.
B) The bond pays 2.5% interest.
C) The market rate of interest is 2.5%.
D) The bonds were retired at $1,025 each.
E) The market rate of interest is 2½% above the contract rate.
17)The carrying value of bonds at maturity always equals:
A) the amount of cash originally received in exchange for the bonds.
B) the par value of the bond.
C) the amount of discount or premium.
D) the amount of cash originally received in exchange for the bonds plus any
unamortized discount or less any premium.
E) $0.
18)An advantage of bonds is:
A) Bonds can decrease return on equity.
B) Bonds require payment of par value at maturity.
C) Bonds do not affect owner control.
D) Bond payments can be burdensome when income and cash flow are low.
E) Bonds require payment of periodic interest.
19)Which of the following statements is true?
A) Interest on bonds is tax deductible.
B) Interest on bonds is not tax deductible.
C) Dividends to stockholders are tax deductible.
D) Bonds do not have to be repaid.
E) Bonds always increase return on equity.
20)A bondholder that owns a $1,000, 10%, 10-year bond has:
A) The right to receive $1,000 at maturity.
B) The right to receive $10 per year until maturity.
C) Ownership rights in the issuing company.
D) The right to receive $10,000 at maturity.
E) The right to receive dividends of $1,000 per year.

Mid-Term Examination Financial Accounting II Duration:90mn

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