ACG2021 Exam 3 modules 8 9 and 10 practice exam questions and answers 2021

ACG2021 Exam 3 modules 8 9 and 10 practice exam questions and answers 2021 ACG2021 Exam 3 modules 8 9 and 10 QUE ST ION 1 1. The collection period of accounts receivable is usually long therefore it is classified as a long-term asset in the balance sheet. True False 4 points QUE ST ION 2 1. On October 1, 2015, Ealys Jewelers accepted a 4-month, 12% note for $6,000 in settlement of an overdue account receivable. The company closes its accounts at the year end. Calculate and record the accrued interest on the note at December 31, 2015. $18 0 $16 0 $24 0 $14 0 4 points QUE ST ION 3 1. A debtor is the party to a credit transaction who will receive the cash for the transaction at a later date. True False 4 points QUE ST ION 4 1. The entity to whom the promise of future payment is made for a promissory note is the ________. maker of the note endorser of the note banker of the note payee of the 4 points QUE ST ION 5 1. Which of the following would be included in the entry by the payee to record a dishonored note receivable? a debit to Accounts Receivable a debit to Interest Revenue a debit to Notes Receivable a credit to Interest Expense 4 points QUE ST ION 6 1. The terms of payment for a note receivable are longer than that of an account receivable. True False 4 points QUE ST ION 7 1. Which of the following asset categories would include the cost of clearing land and removing unwanted buildings? land buildings land improvements machinery and equipment 4 points QUE ST ION 8 1. Which of the following is a characteristic of a plant asset, such as a building? It is used in the operation of a business. It is available for sale to customers in the ordinary course of business. It has a short useful life. It will have a negligible value at the end of its useful life.Th is study source was downloaded by from CourseH on :14:51 GMT -05:00 This study resource was shared via CourseH 4 points QUE ST ION 9 1. On July 31, 2015, Colora Printers purchased a printer for $50,000. It expects the printer to last for four years and has a residual value of $2,000. Compute the depreciation expense on the printer for the year ended December 31, 2015, using the straight-line method. $50,0 00 $5,00 0 $12,5 00 $25,0 00 4 points QUE ST ION 10 1. The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested. True False 4 points QUE ST ION 11 1. When a plant asset is sold for a price lower than its book value, there will be a gain. True False 4 points QUE ST ION 12 1. A trademark should not be amortized over its useful life. True False 4 points QUE ST ION 13 1. At the maturity of a note payable, a borrower will pay ________. the principal plus interest the principal amount only the interest amount only the principal minus interest 4 points QUE ST ION 14 1. A corporation has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit. The company's lawyers believe it is more than remote, but less than probable, that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management? The liability should be estimated and recorded as an expense. The situation should be described in a note to the financial statements. The possible liability should be ignored. Management should consider resigning. 4 points QUE ST ION 15 1. A certain contingent liability was evaluated at year-end; the company felt it was probable that it would become an actual liability, and the amount could be reasonably estimated. If the accountant decided not to report it on the balance sheet or in the notes to the financial statement, what effect would it have on the financial reporting of the company? There would be no effect. The liabilities on the balance sheet would be understated. The information about the transaction would be inadequately disclosed in the notes. The net income of the company would be understated. 4 points QUE ST ION 16 1. The information related to interest expense of Stereo Music Inc. is given below: Based on the above data, which of the following is the interest coverage ratio? 4.14 times 3.92 times 6.49 times 4.92 times 4 points QUE ST ION 17 1. Royal Clothes has performed admirably for the financial year 2014. It decides to reward its employees with a bonus of 15% on annual net income, after deducting the bonus. The net income before allowing bonuses is $300,000. Calculate the bonus allowable to employees. $45,0 00 $39,1 30 $52,9 41 $6,75 0 4 points QUE ST ION 18 1. Federal unemployment compensation tax (FUTA), is not withheld from employees' gross earnings. True False 4 points QUE ST ION 19 1. A corporation declares a dividend of $0.50 per share on 10,000 shares of common stock. Which of the following would be included in the entry to record the declaration? Retained Earnings would be debited for $5,000 Paid-In Capital in Excess of Par Common would be credited for $5,000 Retained Earnings would be credited for $5,000 Dividends Payable Common would be debited for $5,000 4 points QUE ST ION 20 1. Which of the following occurs when a cash dividend is declared? liabilities remain unchanged stockholders' equity decreases liabilities decrease assets increase 4 points QUE ST ION 21 1. Outstanding stock refers to the ________. shares of stock that are held by the stockholders shares of stock that are sold for the highest price total amount of stock that has been authorized by state law total amount of stock that has not been sold yet 4 points QUE ST ION 22 1. Happy Holidays, Inc. has 100,000 shares of common stock issued and outstanding, with a par value of $0.01 per share. It declared a 15% common stock dividend; market value is $12 per share. Which of the following is the correct journal entry to record the transaction? debit Retained Earnings $180,000 and credit Paid-In Capital in Excess of Par Common $180,000 debit Retained Earnings $180,000, credit Common Stock Dividend Distributable $150, and credit Paid-In Capital in Excess of Par Common $179,850 debit Retained Earnings $180,000 and credit Cash $180,000 debit Common Stock Dividend Distributable $150, debit Paid-In Capital in Excess of Par Common $179,850, and credit Retained Earnings $180,000 4 points QUE ST ION 23 1. Bradley Corporation issued 10,000 shares of common stock on January 1, 2015. The stock has a par value of $0.01 per share and was sold for cash at par. Which of the following is the correct journal entry to record this transaction? Cash debited for $100 and Common Stock $0.01 Par Value credited for $100 Cash credited for $10,000 and Common Stock $0.01 Par Value debited for $10,000 Paid-In Capital in Excess of Par Common debited for $9,900 and Common Stock $0.01 Par Value credited for $9,900 Cash debited for $10,000, Common Stock $0.01 Par Value credited for $100, and Paid-In Capital in Excess of Par-Common credited for $9,900 4 points QUE ST ION 24 1. 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. How is the dividend allocated between preferred and common stockholders? The dividend is allocated $7,500 to preferred stockholders and $112,500 to common stockholders. The dividend is allocated $112,500 to preferred stockholders and $7,500 to common stockholders. The dividend is allocated $120,000 to preferred stockholders and no dividend is paid to common stockholders. The dividend is allocated $75,000 to preferred stockholders and $45,000 to common stockholders. 4 points QUE ST ION 25 1. A net loss for the year decreases the balance in Retained Earnings. True False Attempt Score 100 out of 100 points