ACC 100 Unit 4 Milestone Sophia course ACC100 Unit 4 Milestone Sophia course

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1 Don's Landscaping Service purchased a backhoe for $12,000. It has a useful life of five years and a residual value of $1,750.

Based on this information, what is the straight-line depreciation for one year for this asset?

$10,250

$1,025

$2,400

$2,050

Straight Line Depreciation 2 Examine the partial balance sheet vertical analysis below. ASSETS Cash

$23,650

43%

Accounts Receivable $31,350 Total Assets

$55,000

100%

57%


LIABILITIES Accounts Payable

______

____

Notes Payable $15,400

28%

Total Liabilities

62%

EQUITY Total Equity

$20,900

38%

Based on the information shown, what is the correct amount and percentage of accounts payable?

$18,700; 34%

$39,600; 72%

$20,900; 38%

$49,500; 90%

Vertical Analysis and Horizontal Analysis 3 Ned used a journal entry in which a customer currently owed $9,200 to illustrate the damaging effects of uncollectible accounts.


In Ned's journal entry, he debited $9,200 for __________ and entered a credit of $9,200 for __________.

bad debt expense; accounts receivable

bad debt expense; allowance for bad debts

allowance for bad debts; bad debt expense

allowance for bad debts; accounts receivable

Uncollectible Accounts 4 Which of the following internal control systems does TAP Technology, Inc. use when it updates its employee handbook to reflect new company policies?

Control environment

Control activity

Information and communication system

Monitoring process

Internal Controls and Reconciliations 5


Jill purchased a lot (i.e., land) for $35,000 on which to build her store. What kind of activity on a statement of cash flows does this exemplify?

Operating activity

Investing activity

Financing activity

Capital activity

Statement of Cash Flows 6

Which of the amounts below is the correct total uncollectible amount, given the above aging schedule?

$170

$340

$200


$260

Allowance Method: Aging Receivables 7

Using the information shown here, which of the following is the asset turnover ratio?

2.00

0.14

0.09

1.67

Ratio Analysis 8 All of the following assets may have a residual value EXCEPT ________.

a tractor

farmland


irrigation fixtures

a parking lot

Depreciation 9 LONG TERM ASSET ASSET: ASSEMBLY EQUIPMENT COST $15,000 ACCUMULATED DEPRECIATION$2,500 PREPAID INSURANCE

$500

MAINTENANCE COSTS

$1,500

BOOK VALUE

______

Based on the information shown here, which of the following is the book value of the assembly equipment?

$13,500

$10,500

$12,000


$12,500

Financial Reporting of Long Term Assets 10 Ian's primary post-merger concern was fraud. Ian told his employees that he was concentrating on methods that address the identification, review and response to fraud.

Ian focused on the internal control of __________.

risk assessment

monitoring processes

control environment

control activities

Internal Controls and Reconciliations 11

Using these end of period figures, which of the following is the rate of return on sales?

1.70


1.42

1.20

2.59

Ratio Analysis 12 Which of the following is NOT an example of personal property?

One acre of farmland

Tractor

Milking machines

Barn

Long Term Assets 13


Based on the above information, what amount would be recorded in accounts receivable at 130 days?

$15,000

$50,000

$75,000

$25,000

Allowance Method: Aging Receivables 14

Considering the information in the general journal shown here, which of the following is the correct percent of credit sales that are uncollectible?

7%

5%

2%

9%


Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables 15 The value of a machine was $400,000 when purchased new one year ago. It has an expected life of five years and the income statement shows the straight line depreciation rate as 20%.

Using double declining balance depreciation, what is the value of the machine at the end of year two?

$144,000

$160,000

$96,000

$240,000

Accelerated Depreciation 16

Given the information shown here, which of the following is the current ratio?


0.62

0.50

0.64

0.80

Ratio Analysis 17 Which of the following concerning unearned revenues is NOT true?

They are recorded as a revenue account entry.

Adjusting entries are made at the end of a period to report unearned revenues.

They are found on a balance sheet.

They are receipts for services or products that will be performed or delivered at a future date.

Current Liabilities 18 Which of the following is NOT depreciated because it does not get used up?


Land fixtures

Automobiles

Land

Buildings

Depreciation 19 What is the current ratio formula?

Current liabilities/ Current assets

Assets / Liabilities

Current assets / Current liabilities

Total assets / Total liabilities

Ratio Analysis 20 Which of the following examples can be classified as an accounts receivable?


Terry issued a paycheck to his receptionist.

Terry sent a specialty cage supplier a payment on account.

Terry took a $500 deposit for the upcoming stay of the boa constrictor.

Terry placed an order for food for the spotted genet. The terms of sale were cash in advance.

Accounts Receivable Subsidiary Ledgers Accounts Payable Subsidiary Ledgers 21 If Joel took out a three-month loan at 6.5% for remodeling of his store that he estimates will cost $14,500, which of the following is the interest total for the remodeling?

$2,356.25

$235.63

$3,770.00

$231.86

Short Term Notes Payable


22 Which of the following allowances for bad debt should the company enter into their financials for an Accounts Receivable account with a balance of $50,000 if the company estimates that 1.9% of receivables will be uncollectible?

$950.00

$9,500.00

$10,250.00

$1,025.00

Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables 23 Which asset below is a current asset?

Office building

Delivery truck

Commercial kitchen

Prepaid insurance premium


Long Term Assets 1

Using the aging schedule above, which of the following is the total uncollectible amount?

$4,745 $4,610 $3,975 $5,105

Allowance Method: Aging Receivables 2 Which of the following internal controls has Laura implemented at her company if the new system computerizes sales for the protection and security of her customers?

Monitoring processes

Information and communication systems

Risk assessment

Control activities


Internal Controls and Reconciliations 3 Which of the following describes unearned revenues?

$45,000 in total payroll owed to employees on May 1

The accounts payable totals $9,500

$3,500 paid to a company for services it will provide next week

$1,500 in sales tax collected

Current Liabilities 4 Which asset below is a current asset?

Fleet of company cars

Computer


Printer ink

Warehouse

Long Term Assets 5 __________________ includes policies, procedures and mindset of top management. A tangible representation can be found in the employee handbook or annual statement.

Risk assessment

Control activity

Control environment

Monitoring process

Internal Controls and Reconciliations


6 Which of the assets below CANNOT depreciate?

Two all-terrain vehicles

Two cabins

Two acres of land

Two chainsaws

Depreciation 7

Based on this information, which of the following is the correct rate of return on sales?

1.40


0.88

1.26

1.13

Ratio Analysis 8 On April 1, 2013, Maggie bought a new delivery truck for her business. The purchase price of the truck was $34,000. Maggie wrote a check for a 20% down payment. The interest rate on the loan is 8% and the loan period is nine months.

How much interest must Maggie record when she pays off the loan on December 31st?

$1,632

$2,448


$2,176

$2,720

Short Term Notes Payable 9 A business purchased a machine for $750,000. The expected life of the machine is five years and the straight line depreciation rate is 20%. The machine is expected to have a residual value of $10,000.

Using the double-declining balance method of depreciation, what is the correct book value for the machine at the end of the first year?

$590,000

$450,000

$440,000


$602,000

Accelerated Depreciation 10 Which of the following allowances for bad debt should the company enter into their financials for an Accounts Receivable account with a balance of $1,500,000 if the company estimates that 3.3% of receivables will be uncollectible?

$90,000

$49,500

$37,500

$60,000

Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables 11

Based on the information from the last six months (shown here), which of the following is the current ratio?


6.46

9.08

7.31

9.24

Ratio Analysis 12 Examine the partial balance sheet vertical analysis below.

Based on the information shown, what is the correct amount and percentage of accounts payable?


$20,000; 25%

$18,000; 22.5%

$22,000; 25%

$20,000; 20%

Vertical Analysis and Horizontal Analysis 13 Marian received an extra principal payment on the loan her business made to another company. What activity does this exemplify?

Financing activity

Investing activity

No activity to record on the statement of cash flows


Operating activity

Statement of Cash Flows 14 Which of the following examples can be classified as an accounts receivable?

Terry took a $500 deposit for the upcoming stay of the boa constrictor.

Terry placed an order for food for the spotted genet. The terms of sale were cash in advance.

Terry sent a specialty cage supplier a payment on account.

Terry issued a paycheck to his receptionist.

Accounts Receivable Subsidiary Ledgers Accounts Payable Subsidiary Ledgers 15 Which asset below never has residual value?


Office building

Forklift

Land

Truck

Depreciation 16 What is the current ratio formula?

Current liabilities/ Current assets

Current assets / Current liabilities

Assets / Liabilities


Total assets / Total liabilities

Ratio Analysis 17 The aging schedule below lists the amount and percentage that the company estimates will be uncollectible.

Which amount would be recorded in accounts receivable at over 60 days?

$72,694

$65,475

$1,984

$5,234

Allowance Method: Aging Receivables 18 LONG TERM ASSET


ASSET: FORKLIFT COST $56,000 ACCUMULATED DEPRECIATION$22,400 PREPAID INSURANCE MAINTENANCE

$6,500

BOOK VALUE

______

$1,500

Based on the following information from a company's asset record, what is the book value of the forklift?

$56,000

$25,600

$33,600

$32,100

Financial Reporting of Long Term Assets 19 Which group of assets contains ONLY personal property?


Vehicle, supplies and factory equipment

Land, supplies and vehicle

Vehicle, landscaping and office equipment

Landscaping, supplies and factory equipment

Long Term Assets 20 A company's sales for the year were $549,650 and a credit to Allowance for Bad Debt for $16,489.50 was made.

Based on this entry, what percentage of sales is considered uncollectible?

3%

3.5%

2.5%


4%

Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables 21 A company's year-end financial information shows the following amounts. Current assets $75,000 Current liabilities

$30,000

Net income

$34,000

Net sales

$164,500

Average total assets

$150,000

Based on this information, what is the company's asset turnover ratio?

0.23

2.2

1.1


0.45

Ratio Analysis 22 Ned used a journal entry in which a customer currently owed $9,200 to illustrate the damaging effects of uncollectible accounts.

In Ned's journal entry, he debited $9,200 for __________ and entered a credit of $9,200 for __________.

bad debt expense; allowance for bad debts

allowance for bad debts; bad debt expense

allowance for bad debts; accounts receivable

bad debt expense; accounts receivable

Uncollectible Accounts 23


Based on the information above, which of the following is the straight line depreciation of the equipment? $7,500 $7,300 $7,000 $7,700

Straight Line Depreciation


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