ACC 291 Final Exam

ACC 291 Final Exam(Questions) 1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense? A. Bad Debts Expense ................ ................ $15,000 Allowances for Doubtful Accounts ................ ................ $15,000 B. Bad Debts Expense ................ ................ $12,000 Allowances for Doubtful Accounts ................ ................ $12,000 C. Bad Debts Expense ................ ................ $12,000 Accounts Receivable ................ ................ ................. $12,000 D. Bad Debts Expense ................ ................ $15,000 Accounts Receivable ................ ................ ................. $15,000 2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period? A. $15,000 B. $12,000 C. $18,000 D. $8,000 3) Intangible assets A. should be reported under the heading Property, Plant, and Equipment B. should be reported as a separate classification on the balance sheet C. should be reported as Current Assets on the balance sheet D. are not reported on the balance sheet because they lack physical substance 4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that A. must be generated internally B. are depletable natural resources C. do not have physical substance D. have been exchanged at a gain 5) The book value of an asset is equal to the A. asset’s market value less its historic cost B. blue book value relied on by secondary markets C. replacement cost of the asset D. asset’s cost less accumulated depreciation 6) Gains on an exchange of plant assets that has commercial substance are A. deducted from the cost of the new asset acquired B. deferred C. not possible D. recognized immediately 7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as A. capital expenditures B. expense expenditures C. improvements D. revenue expenditures 8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as A. capital expenditures B. expense expenditures C. ordinary repairs D. revenue expenditures 9) When an interest-bearing note matures, the balance in the Notes Payable account is A. less than the total amount repaid by the borrower B. the difference between the maturity value of the note and the face value of the note C. equal to the total amount repaid by the owner D. greater than the total amount repaid by the owner 10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be A. $12,000 B. $6,000 C. $3,000 D. $2,000