ACC 221 Final Exam _ Multiple-Choice Quiz Solution

Question 1

2 pts

Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is

a deduction from the balance per bank statement
an addition to the balance per company's records
an addition to the balance per bank statement
a deduction from the balance per company's records

Question 2

2 pts

A check drawn by a company in payment of a voucher for $635 was recorded in the journal as $365. This item would be included in the bank reconciliation as a(n)

addition to the balance per the company's records
deduction from the balance per the bank statement
deduction from the balance per the company's records
addition to the balance per the bank statement

Question 3

2 pts

The amount of deposits in transit is included on the bank reconciliation as a(n)

deduction from the balance per the company's books
addition to the balance per bank statement
addition to the balance per company books
deduction from the balance per bank statement

Question 4

2 pts

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What journal entry is required in the company's accounts?

debit Accounts Receivable; credit Cash
debit Cash; credit Other Income
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Quiz: 221 Final Exam: Multiple-Choice

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debit Cash; credit Other Income
debit Other Income; credit Cash
debit Cash; credit Accounts Receivable

Question 5

2 pts

Derek Company gathered the following reconciling information in preparing its September bank reconciliation:

Cash balance per books, 9/30

$2,750

Deposits in transit

200

Notes receivable and interest collected by bank

630

Bank charge for check printing
Outstanding checks
NSF check

30
1,250
190

The adjusted cash balance per books on September 30 is

$1,910.
$2,110.
$3,160.
$5,050.

Question 6

2 pts

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

Allowance for Doubtful Accounts
Accounts Receivable
Uncollectible Accounts Expense
Interest Expense

Question 7

2 pts

A debit balance in the Allowance for Doubtful Accounts

indicates that actual bad debt write-offs have been less than what was estimated.
cannot occur if the percentage of receivables method of estimating bad debts is used.

indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
is the normal balance for that account.
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is the normal balance for that account.

Question 8

2 pts

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $1,200 debit
balance, the adjustment to record the bad debt expense for the period will require a

credit to Allowance for Doubtful Accounts for $5,000.
debit to Bad Debt Expense for $4,000.
debit to Bad Debt expense for $2,800
debit to Bad Debt Expense for $5,200.

Question 9

2 pts

When a company uses the allowance method of accounting for uncollectible receivables, the journal entry to reinstate a previously written off account would include:

A credit to Bad Debt Expense
A debit to Bad Debt Expense
A debit to Allowance for Doubtful Accounts
A credit to Allowance for Doubtful Accounts

Question 10

2 pts

On October 1, Black Company receives a 6% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At
December 31, Black should record interest revenue of

$1,200
$0
$300
$600

Question 11

2 pts

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31.
What adjusting entry should be made before the financial statements can be prepared?

Interest Receivable
Interest Revenue

800
800

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Interest Receivable
Interest Revenue
Note Receivable
Cash
Cash

200
200
40,000
40,000
200

Interest Revenue

200

Question 12

2 pts

Which of the following is included in the cost of land?

fences on the land

cost of paving a parking lot
brokerage commission
outdoor parking lot lighting attached to the land

Question 13

2 pts

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have
a cost basis of

$82,000
$93,000
$85,000
$90,000

Question 14

2 pts

Expenditures that add to the utility of fixed assets for more than one accounting period are

committed expenditures
capital expenditures
current expenditures
revenue expenditures

Question 15

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2 pts

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On June 8, Alton Co. issued a $90,000, 6%, 120-day note payable to Seller Co. What is the maturity value of the note?

$90,450
$95,400
$90,000
$91,800

Question 16

2 pts

For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax?

only Social Security tax
none of these
only unemployment compensation tax
only Medicare tax

Question 17

2 pts

An employee receives an hourly rate of $25, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows:
hours worked: 46, federal income tax withheld: $350, cumulative earnings for year (prior to current week): $99,700, social security tax rate: 6.0% on maximum of
$100,000 and Medicare tax rate is 1.5% on all earnings. What is the net amount to be paid the employee?

$875.00
$1,133.14

$857.00
$838.62

Question 18

2 pts

The following totals for the month of June were taken from the payroll register of Arcon Company:
Salaries expense
Social security and Medicare Taxes withheld

$14,000
975

Income Taxes withheld

2,600

Retirement Savings

1,000

The journal entry to record the payment of net pay would include a:

credit to Salaries Expense for $9,425
debit to Salaries Payable for $9,425

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credit to Salaries Payable for $9,425
debit to Salaries Payable for $14,000

Question 19

2 pts

Which of the following taxes does the employer (only) pay?

Medicare tax
FICA taxes
Social Security tax
unemployment compensation

Question 20

2 pts

The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the:

employee's earnings record
employer's earnings record
payroll register
payroll check

Question 21

2 pts

The two ways that a corporation can be classified by ownership are:

majority and minority
for profit or not-for-profit
inside and outside
stock and non-stock

Question 22

2 pts

A corporation issues 1,500 shares of common stock for $32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would
include a credit to Common Stock for:

$2,000
$17,000

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$15,000
$32,000

Question 23

2 pts

Nexis Corp. issues 1,000 shares of $15 par value common stock at $25 per share. When the transaction is recorded, credits are made to:

Common Stock $25,000 and Retained Earnings $15,000
Common Stock $15,000 and Paid-in Capital in Excess of Par Value $10,000
Common Stock $25,000
Common Stock $15,000 and Paid-in Capital in Excess of Stated Value $10,000

Question 24

2 pts

The date on which a cash dividend becomes a binding legal obligation is on the:

payment date
date of record
last day of the fiscal year end
declaration date

Question 25

2 pts

The net effect to a corporation of the payment of a cash dividend is to:

decrease assets and decrease stockholders' equity
increase assets and increase stockholders' equity
decrease liabilities and decrease stockholders' equity
increase stockholders' equity and decrease liabilities

Question 26

2 pts

The entry to record the amortization of a discount on bonds payable is:

debit Discount on Bonds Payable; credit Interest Expense
debit Bonds Payable; credit Interest Expense

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debit Interest Expense; credit Discount on Bonds Payable
debit Discount on Bonds Payable; credit Bonds Payable

Question 27

2 pts

If the market rate of interest is less than the coupon rate of interest, the bonds will sell for a:

premium
discount
face value
maturity value