ACC 250 Final Practice Exam Questions And Answers
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Under accrual basis accounting, revenue is recorded only when cash is received. ✅ ANS False
The cost of an asset is $1,110,000, and its residual value is $110,000. Estimated useful life of the asset is eight
years. Calculate depreciation for the second year using the double-declining-balance method of depreciation.
(Do not round any intermediate calculations, and round your final answer to the nearest dollar.) ✅ ANS
$208,125
When using the allowance method, after a company has previously written off an account, ________. ✅ ANS
when a customer pays on an account that has been written off, the company needs to reverse the write-off to
the Allowance for Bad Debts account and then record the receipt of cash
Springer Company, a sole proprietorship, had the following transactions in August:
Earned $3,000 of revenues on account; collected $2,000 from a customer for services provided last month;
incurred $600 of repair expense and paid cash; paid $300 for rent that it owed from the previous month.
What is the net income in August? ✅ ANS $2400
If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is ________. ✅ ANS
$194,370
An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known
as a revenue expenditure. ✅ ANS False
Paid-in capital is externally generated capital and results from transactions with outsiders. ✅ ANS True
Tony's gross pay for the month is $2,700. Tony's deduction for federal income tax is based on a rate of 21%.
Tony has no voluntary deductions. Tony's year-to-date pay is under the limit for OASDI. What is the amount
of FICA tax withheld from Tony's pay? (Assume a
FICAlong dash—OASDI
Tax of 6.2% and
FICAlong dash—Medicare
, Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest cent.)
✅ ANS $206.55
A corporation issues 16,000 shares of its $3 stated value common shares. The issue price is $9 per share. The
credit to the Common Stock account is $144,000. ✅ ANS False
In computing the lower-of-cost-or-market, under IFRS, the market value is defined as the net realizable value,
which is essentially the sales price. ✅ ANS True
A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an
actual liability. If this was not reported in the notes to the financial statements, what is the effect on the
financial reporting of the company? ✅ ANS The information about the transaction would be inadequately
disclosed in the notes.
Bad Debt Expense is not debited when a company writes off an account receivable when using the allowance
method because the company has already recorded the Bad Debt Expense as an adjusting entry. ✅ ANS True
Revenue is earned when ________. ✅ ANS (or as) the business satisfies each performance obligation
Which of the following would be included in the journal entry to record the payment of sales tax payable? ✅
ANS a debit to Sales Tax Payable
The following information relates to Blake Auto Supply.
Net Sales Revenue
$191,000
Cost of Goods Sold
150,000
Interest Revenue
12,000
Operating Expenses
40,000
Calculate the net income of Blake Auto Supply. ✅ ANS $13,000
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Under accrual basis accounting, revenue is recorded only when cash is received. ✅ ANS False
The cost of an asset is $1,110,000, and its residual value is $110,000. Estimated useful life of the asset is eight
years. Calculate depreciation for the second year using the double-declining-balance method of depreciation.
(Do not round any intermediate calculations, and round your final answer to the nearest dollar.) ✅ ANS
$208,125
When using the allowance method, after a company has previously written off an account, ________. ✅ ANS
when a customer pays on an account that has been written off, the company needs to reverse the write-off to
the Allowance for Bad Debts account and then record the receipt of cash
Springer Company, a sole proprietorship, had the following transactions in August:
Earned $3,000 of revenues on account; collected $2,000 from a customer for services provided last month;
incurred $600 of repair expense and paid cash; paid $300 for rent that it owed from the previous month.
What is the net income in August? ✅ ANS $2400
If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is ________. ✅ ANS
$194,370
An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known
as a revenue expenditure. ✅ ANS False
Paid-in capital is externally generated capital and results from transactions with outsiders. ✅ ANS True
Tony's gross pay for the month is $2,700. Tony's deduction for federal income tax is based on a rate of 21%.
Tony has no voluntary deductions. Tony's year-to-date pay is under the limit for OASDI. What is the amount
of FICA tax withheld from Tony's pay? (Assume a
FICAlong dash—OASDI
Tax of 6.2% and
FICAlong dash—Medicare
, Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest cent.)
✅ ANS $206.55
A corporation issues 16,000 shares of its $3 stated value common shares. The issue price is $9 per share. The
credit to the Common Stock account is $144,000. ✅ ANS False
In computing the lower-of-cost-or-market, under IFRS, the market value is defined as the net realizable value,
which is essentially the sales price. ✅ ANS True
A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an
actual liability. If this was not reported in the notes to the financial statements, what is the effect on the
financial reporting of the company? ✅ ANS The information about the transaction would be inadequately
disclosed in the notes.
Bad Debt Expense is not debited when a company writes off an account receivable when using the allowance
method because the company has already recorded the Bad Debt Expense as an adjusting entry. ✅ ANS True
Revenue is earned when ________. ✅ ANS (or as) the business satisfies each performance obligation
Which of the following would be included in the journal entry to record the payment of sales tax payable? ✅
ANS a debit to Sales Tax Payable
The following information relates to Blake Auto Supply.
Net Sales Revenue
$191,000
Cost of Goods Sold
150,000
Interest Revenue
12,000
Operating Expenses
40,000
Calculate the net income of Blake Auto Supply. ✅ ANS $13,000
