FMGT1115 Practice Final Exam - Fall 2022
Solution Key
, Question 1 - Multiple Choice (25 marks)
Choose the one alternative that best completes the statement or answers the question.
1) If the allowance method of accounting for doubtful receivables is used, what account is
debited in the entry to write off a customer's account as uncollectible?
A. Accounts Receivable
B. Allowance for Doubtful Accounts
C. Bad-debt Expense
D. Sales Returns and Allowances
2) The current credit balance in allowance for doubtful accounts is $750. Management estimates
that 5% of net credit sales of $100,000 will be uncollectible. Based on the foregoing data,
what is the bad-debt expense balance on the income statement?
A. $5,043
B. $5,000
C. $5,250
D. $5,750
3) The interest on a $50,000 note at 4% for 10 months is:
A. $2000
B. $1,667
C. $2,400
D. $2,010
4) Cash received today for services to be performed in the future is called a(n):
A. Promissory note
B. Unearned revenue
C. Principal note
D. Mature note
5) Company A accepted a five-month, $21,000 note receivable, with 7% interest, from B
Corporation on May 31, 2021. Company A's year end is December 31. The amount of interest
to be accrued on December 31, 2021 is:
A. $858
B. $1,470
C. $613
D. $320
6) Which one of the following is a characteristic of property, plant and equipment?
A. Intangible
B. Short-life
C. Used in the business
D. Held for investment purposes
Solution Key
, Question 1 - Multiple Choice (25 marks)
Choose the one alternative that best completes the statement or answers the question.
1) If the allowance method of accounting for doubtful receivables is used, what account is
debited in the entry to write off a customer's account as uncollectible?
A. Accounts Receivable
B. Allowance for Doubtful Accounts
C. Bad-debt Expense
D. Sales Returns and Allowances
2) The current credit balance in allowance for doubtful accounts is $750. Management estimates
that 5% of net credit sales of $100,000 will be uncollectible. Based on the foregoing data,
what is the bad-debt expense balance on the income statement?
A. $5,043
B. $5,000
C. $5,250
D. $5,750
3) The interest on a $50,000 note at 4% for 10 months is:
A. $2000
B. $1,667
C. $2,400
D. $2,010
4) Cash received today for services to be performed in the future is called a(n):
A. Promissory note
B. Unearned revenue
C. Principal note
D. Mature note
5) Company A accepted a five-month, $21,000 note receivable, with 7% interest, from B
Corporation on May 31, 2021. Company A's year end is December 31. The amount of interest
to be accrued on December 31, 2021 is:
A. $858
B. $1,470
C. $613
D. $320
6) Which one of the following is a characteristic of property, plant and equipment?
A. Intangible
B. Short-life
C. Used in the business
D. Held for investment purposes
