ACG2021-Unit 3

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Review Test Submission: Exam 3 (Chapters 8, 9, 10 and 11)
•             Question 1
4 out of 4 points

Which of the following is an example of exercising internal control over receivables?
Selected Answer:             separating cash collection and credit allowance duties

•             Question 2
4 out of 4 points

The following information is from the 2015 records of Armand Camera Shop:



Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,000 of accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2015.
Selected Answer:             $6,500

•             Question 3
4 out of 4 points

The interest period extends from the original date of the note to the maturity date.
Selected Answer:             True

•             Question 4
4 out of 4 points

The number of times a company collects the average accounts receivable balance in a year is known as the accounts receivable turnover ratio.
Selected Answer:             True

•             Question 5
4 out of 4 points

If the maker of the note fails to repay the borrowed amount on the maturity date, the note is said to be dishonored.
Selected Answer:             True

•             Question 6
4 out of 4 points

The net realizable value of Accounts Receivable is calculated by subtracting Bad Debts Expense from Accounts Receivable.
Selected Answer:             False

•             Question 7
4 out of 4 points

Fred Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure?
Selected Answer:             oil change and lubrication

•             Question 8
4 out of 4 points

Nobells Corp. has acquired land and paid an amount of $500 as brokerage to acquire the land. However, the company's accountant has recorded the $500 as a revenue expenditure. What is the effect of this error?
Selected Answer:             net income is understated by $500

•             Question 9
4 out of 4 points

Which of the following is a characteristic of a plant asset, such as a building?
Selected Answer:             It is used in the operation of a business.

•             Question 10
4 out of 4 points

Hastings Corporation has purchased a group of assets for $15,000. The assets and their relative market values are listed below.



Which of the following amounts would be debited to the Land account?
Selected Answer:             $5,571

•             Question 11
4 out of 4 points

Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized.
Selected Answer:             True

•             Question 12
4 out of 4 points

In 2015, a corporation purchased a small business for $250,000. The market value of the small business's assets was $400,000, and the market value of the liabilities was $200,000. The corporation recorded goodwill of $50,000 at the time of acquisition. At the end of 2016, it measured the goodwill and found it had a remaining fair value of only $20,000. At year-end 2016, the corporation will ________.
Selected Answer:             record an impairment loss

•             Question 13
4 out of 4 points

________ is pay stated as a percentage of a sale amount.
Selected Answer:             Commission

•             Question 14
4 out of 4 points

Net pay is the total amount of compensation that an employee takes home, after the deductions are made.
Selected Answer:             True

•             Question 15
Needs Grading

On December 31, 2014, Ferrero Inc. borrowed $500,000 by signing a note payable. The note is for 5 years and bears interest at the rate of 8%. The note is payable in 5 yearly installments of $100,000 plus interest due at the end of every year beginning on December 31, 2015. Which portion is classified as the long-term portion of Notes Payable at December 31, 2014?
Selected Answer:             [None Given]

•             Question 16
4 out of 4 points

The times-interest-earned ratios of four companies are given below:



Which of the above companies has the highest debt-paying ability?
Selected Answer:             Bennett Inc.

•             Question 17
4 out of 4 points

The times-interest-earned ratio is calculated as ________.
Selected Answer:             earnings before interest and tax divided by interest expense

•             Question 18
4 out of 4 points

Steve, an employee of Panache Inc., has gross salary for March of $5,000. The entire amount is under the OASDI limit of $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The journal entry in the payroll cycle to record employer's payroll tax expense includes a credit to FICA Medicare Taxes Payable for $145. (Assume a FICA OASDI Tax of 6.2% and FICA Medicare Tax of 1.45 %.)
Selected Answer:             False

•             Question 19
4 out of 4 points

Treasury stock is a contra equity account.
Selected Answer:             True

•             Question 20
4 out of 4 points

A company cannot report a gain or loss when buying or selling its own stock.
Selected Answer:             True

•             Question 21
4 out of 4 points

On June 30, 2015, Stephans Inc. showed the following data on the equity section of their balance sheet:



On July 1, 2015, the company declared and distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, what would be the total stockholders' equity?
Selected Answer:             $1,340,000

•             Question 22
4 out of 4 points

Refer to the following information for Tangent Corporation:



If Tangent resold 1,200 shares of treasury stock for $14.5 per share, which of the following statements would be true?
Selected Answer:             The Treasury Stock account would go down by $24.000.

•             Question 23
0 out of 4 points

Landess Corporation currently has 120,000 shares outstanding of $1 par value common stock. The stock was originally issued for $12 per share. On March 15, the board of directors declares a 10% stock dividend when the stock is selling for $16 per share. Which of the following is the correct journal entry to record this transaction?
Selected Answer:             debit Common Stock Dividend Distributable $12,000, debit Paid-In Capital in Excess of Par Common for $180,000 and credit Retained Earnings $192,000

•             Question 24
4 out of 4 points

A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of $120,000. What is the dividend per share for preferred stock and for common stock?
Selected Answer:             The dividend per share is $7.50 to preferred stock and $0.30 per share to common stock.

•             Question 25
4 out of 4 points

A corporation originally issued $5 par value common stock for $6 per share. Which of the following would be included in the entry to record the purchase of 300 shares of treasury stock for $10 per share?
Selected Answer:             Treasury Stock Common would be debited for $3,000.


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