ACCT 201A EXAM QUESTIONS & DETAILED ANSWERS
(100% VERIFIED) GRADED A+
A major disadvantage of a corporation is - CORRECT ANSWER >>>Additional Taxes
ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When the
transaction is recorded, credits are made to - CORRECT ANSWER >>>Common Stock $10,000
and Paid-In Capital in Excess of Stated Value $2,000
Additions to plant assets are - CORRECT ANSWER >>>Capital Expenditures
Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30,
2022. The machine was purchased for $80,000 on January 1, 2018, and was depreciated on a
straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000,
what was the amount of the gain or loss recorded at the time of the sale? - CORRECT ANSWER
>>>$18,000 loss
Cuso Company purchased equipment on January 1, 2021, at a total invoice cost of $400,000.
The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5
years. What is the amount of accumulated depreciation at December 31, 2022, if the
straightline method of depreciation is used? - CORRECT ANSWER >>>$156,000
Depreciation is a process of - CORRECT ANSWER >>>Cost Allocation
Entries for cash dividends are required on the - CORRECT ANSWER >>>Declaration date and the
payment date
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,Howard Corporation issued a 20-year mortgage note payable on January 1, 2022. At December
31, 2022, the unpaid principal balance will be reported as - CORRECT ANSWER >>>Part current
and part long-term liability
If a company reports goodwill as an intangible asset on its books, what is the one thing you
know with certainty? - CORRECT ANSWER >>>The company purchased another company
If everything else is held constant, earnings per share is increased by - CORRECT ANSWER
>>>The purchase of treasury stock
In the stockholders' equity section of the balance sheet, common stock - CORRECT ANSWER
>>>Is part of paid-in capital
In the stockholders' equity section, the cost of treasury stock is deducted from - CORRECT
ANSWER >>>Total paid-in capital and retained earnings
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December 31 -
CORRECT ANSWER >>>Both the note payable and the interest payable are current liabilities
Laurel Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a
premium, this indicates that - CORRECT ANSWER >>>The contractual interest rate exceeds the
market interest rate
No Fault Insurance Company collected a premium of $18,000 for a 1-year insurance policy on
April 1. What amount should No Fault report as a current liability for Unearned Insurance
Premiums at December 31? - CORRECT ANSWER >>>$4,500
On January 1, 2022, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to
record the issuance of the bonds would include a - CORRECT ANSWER >>>Credit to Bonds
Payable for $200,000
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, Ottman Company borrows $88,500 on September 1, 2022, from Farley State Bank by signing an
$88,500, 12%, 1-year note. What is the accrued interest at December 31, 2022? - CORRECT
ANSWER >>>$3,540
Pierce Company incurred $150,000 of research and development costs in its laboratory to
develop a new product. It spent $20,000 in legal fees for a patent granted on January 2, 2022.
On July 31, 2022, Pierce paid $15,000 for legal fees in a successful defense of the patent. What
is the total amount that should be debited to Patents through July 31, 2022? - CORRECT
ANSWER >>>$35,000
Preferred stock may have priority over common stock except in - CORRECT ANSWER >>>Voting
Prescher Corporation issued bonds that pay interest every January 1. The entry to accrue bond
interest at December 31 includes a - CORRECT ANSWER >>>Credit to Interest Payable
The benefits to leasing include each of the following except - CORRECT ANSWER >>>Higher
resale value
The market interest rate - CORRECT ANSWER >>>Is the rate investors demand for loaning funds
The time period for classifying a liability is one year or the operating cycle, whichever is -
CORRECT ANSWER >>>Longer
To be classified as a current liability, a debt must be expected to be paid, within - CORRECT
ANSWER >>>1 year or the operating cycle, whichever is longer
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(100% VERIFIED) GRADED A+
A major disadvantage of a corporation is - CORRECT ANSWER >>>Additional Taxes
ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When the
transaction is recorded, credits are made to - CORRECT ANSWER >>>Common Stock $10,000
and Paid-In Capital in Excess of Stated Value $2,000
Additions to plant assets are - CORRECT ANSWER >>>Capital Expenditures
Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30,
2022. The machine was purchased for $80,000 on January 1, 2018, and was depreciated on a
straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000,
what was the amount of the gain or loss recorded at the time of the sale? - CORRECT ANSWER
>>>$18,000 loss
Cuso Company purchased equipment on January 1, 2021, at a total invoice cost of $400,000.
The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5
years. What is the amount of accumulated depreciation at December 31, 2022, if the
straightline method of depreciation is used? - CORRECT ANSWER >>>$156,000
Depreciation is a process of - CORRECT ANSWER >>>Cost Allocation
Entries for cash dividends are required on the - CORRECT ANSWER >>>Declaration date and the
payment date
1|Page
,Howard Corporation issued a 20-year mortgage note payable on January 1, 2022. At December
31, 2022, the unpaid principal balance will be reported as - CORRECT ANSWER >>>Part current
and part long-term liability
If a company reports goodwill as an intangible asset on its books, what is the one thing you
know with certainty? - CORRECT ANSWER >>>The company purchased another company
If everything else is held constant, earnings per share is increased by - CORRECT ANSWER
>>>The purchase of treasury stock
In the stockholders' equity section of the balance sheet, common stock - CORRECT ANSWER
>>>Is part of paid-in capital
In the stockholders' equity section, the cost of treasury stock is deducted from - CORRECT
ANSWER >>>Total paid-in capital and retained earnings
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December 31 -
CORRECT ANSWER >>>Both the note payable and the interest payable are current liabilities
Laurel Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a
premium, this indicates that - CORRECT ANSWER >>>The contractual interest rate exceeds the
market interest rate
No Fault Insurance Company collected a premium of $18,000 for a 1-year insurance policy on
April 1. What amount should No Fault report as a current liability for Unearned Insurance
Premiums at December 31? - CORRECT ANSWER >>>$4,500
On January 1, 2022, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to
record the issuance of the bonds would include a - CORRECT ANSWER >>>Credit to Bonds
Payable for $200,000
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, Ottman Company borrows $88,500 on September 1, 2022, from Farley State Bank by signing an
$88,500, 12%, 1-year note. What is the accrued interest at December 31, 2022? - CORRECT
ANSWER >>>$3,540
Pierce Company incurred $150,000 of research and development costs in its laboratory to
develop a new product. It spent $20,000 in legal fees for a patent granted on January 2, 2022.
On July 31, 2022, Pierce paid $15,000 for legal fees in a successful defense of the patent. What
is the total amount that should be debited to Patents through July 31, 2022? - CORRECT
ANSWER >>>$35,000
Preferred stock may have priority over common stock except in - CORRECT ANSWER >>>Voting
Prescher Corporation issued bonds that pay interest every January 1. The entry to accrue bond
interest at December 31 includes a - CORRECT ANSWER >>>Credit to Interest Payable
The benefits to leasing include each of the following except - CORRECT ANSWER >>>Higher
resale value
The market interest rate - CORRECT ANSWER >>>Is the rate investors demand for loaning funds
The time period for classifying a liability is one year or the operating cycle, whichever is -
CORRECT ANSWER >>>Longer
To be classified as a current liability, a debt must be expected to be paid, within - CORRECT
ANSWER >>>1 year or the operating cycle, whichever is longer
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