___1. When a customer account is recognized as uncollectible and written off, under the allowance method

a. it is always debited to Allowance for Doubtful Accounts.

b. it is always debited to Bad Debt Expense.

c. it may be debited to Bad Debts Expense if the amount is immaterial.

d. it is only debited to Allowance for Doubtful Accounts under IFRS.

___2. The following information is available for Steelhead Company:

Allowance for doubtful accounts at December 31, 2019 $8,000

Credit sales during 2020 400,000

Accounts receivable deemed worthless and written off during 2020 9,000

As a result of a review and aging of accounts receivable in early January 2021,it has been determined that an allowance for doubtful accounts of $7,500 is needed at December 31, 2020. What amount should Steelhead record as bad debt expense for the year ended December 31, 2020?

a. $6,500

b. $7,500

c. $8,500

d. $15,500

___3. The stated interest rate is also referred to as the

a. effective interest rate.

b. yield.

c. market rate.

d. coupon rate.

___4. When the stated rate is higher than the effective interest rate,

a.the note is exchanged at a discount.

b. the excess is amortized by debiting Notes Receivable and crediting the amount of interest income that is recognized.

c. the note's fair value is more than its face value.

d. the note's fair value is equal to its future value.

___5. "Net realizable value" of an inventory item is now strictly defined as

a. the estimated selling price of the item.

b. the estimated selling price less estimated costs to sell and complete the item.

c. the estimated selling price plus estimated costs to sell and complete the item.

d. the original cost price less estimated costs to sell and complete the item.

___6. In a period of rising prices, the inventory method that tends to give the highest reported inventory value on the statement of financial position is

a. FIFO.

b. moving average.

c. specific identification.

d. weighted-average.

___7. The following information is available for Varden Inc. for last year:

Freight-in $20,000

Purchase returns 62,000

Selling expenses 110,000

Ending inventory 310,000

If the cost of goods sold is equal to 400% of selling expenses, what was the cost of goods available for sale?

a. $390,000

b. $420,000

c. $720,000

d. $750,000

___8. Since it began operations ten years ago, Carp Corp. has been using the weighted average method of inventory valuation. Its 2020 ending inventory was $28,000, but it would have been $70,000 if FIFO had been used. Thus, if FIFO had been used, Carp's income before income taxes would have been

a. $42,000 less over the ten-year period.

b. $42,000 greater over the ten-year period.

c. $42,000 greater in 2020.

d. $42,000 less in 2020.

___9. The 2020 financial statements of Bass Ltd. reported beginning inventory of $260,000, ending inventory of $290,000, and cost of goods sold of $1,300,000 for the year. To one decimal, Bass's inventory turnover ratio for 2020 is

a. 0.2 times.

b. 4.5 times.

c. 4.7 times.

d. 5.0 times.

__10. If the month-end bank statement shows a balance of $49,000, outstanding cheques are $16,000, a deposit of $7,000 was in transit at month end, and a cheque for $800 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

a. $48,800.

b. $40,800.

c. $40,200.

d. $40,000.

____11. When the declining-balance method is used, depreciation expense for a given asset will

a. decline by a constant amount each year.

b. be the same each year.

c. decrease rapidly at first, then slowly over the life of the asset.

d. vary from year to year in relation to changes in output.

____12. Norway Corporation acquired land, buildings, and equipment from a bankrupt competitor at a lump-sum price of $132,000. At the time of acquisition, Norway paid $12,000 to have the assets appraised. The appraisal disclosed the following fair values:

Land $96,000

Buildings 76,800

Equipment 19,200

What costs should be assigned to the land, buildings, and equipment, respectively?

a. $96,000, $76,800, and $19,200

b. $66,000, $52,800, and $13,200

c. $72,000, $57,600, and $14,40

d. $48,000, $48,000, and $48,000

____13. Current Canadian practice indicates that the maximum period over which an intangible asset should be amortized is

a. 20 years.

b. 28 years.

c. 40 years.

d. its useful life or legal life, whichever is shorter.

____14. Purchased goodwill represents

a. the excess of the price paid over the fair value of the net assets obtained in a business combination.

b. the excess of the price paid over the book value of the net assets obtained in a business combination.

c. the difference in the aggregate amount of the market prices of the shares of the combining companies.

d. a tangible asset.

____15. As it is generally used in accounting, what is depreciation?

a. It is a process of asset valuation for balance sheet purposes.

b. It applies only to long-lived intangible assets.

c. It is used to indicate a decline in market value of a long-lived asset.

d. It is an accounting process that allocates long-lived asset cost to accounting periods.

Use the following data to answer questions 16-19.

On July 1, 2020, Bosnia Corp. purchased a new piece of equipment for $300,000. The equipment has an estimated useful life of 5 years and an estimated residual value of $25,000. Bosnia uses the calendar year as its fiscal year, and records depreciation to the nearest month.

____16. What would the straight-line depreciation be for fiscal 2020?

a. $60,000

b. $55,000

c. $30,000

d. $27,500

____17. What would be the double declining-balance depreciation for 2021?

a. $72,000

b. $96,000

c. $110,000

d. $120,000

____18. If Bosnia expensed the total cost of the equipment at the time of purchase, what was the effect on 2020 and 2021 income before taxes, assuming Bosnia uses straight-line depreciation?

a. $245,000 understated and $55,000 overstated

b. $270,000 understated and $30,000 overstated

c. $272,500 understated and $55,000 overstated

d. $300,000 understated and $30,000 overstated

____19. If, at the beginning of 2022, Bosnia decides the equipment still has five more years of life beyond December 31, 2021, with the same residual value, what would be the straight-line depreciation for 2022? (Assume straight-line used in all years.)

a. $30,000

b. $32,083

c. $38,500

d. $55,000

____20. Other comprehensive income includes changes in equity

a. related to non-owner sourced transactions.

b. related to payment of dividends.

c. due to errors of other years.

d. due to unusual gains and losses of the current year.

____21. The cost model of accounting for PP&E assets

a. should be applied to investment property only.

b. should be applied to other PP&E assets only.

c. can be applied to all classes of PP&E including investment property.

d. is not appropriate under current Canadian GAAP.

____22. When an investor is using the equity method and the investee reports net income, the journal entry on the investor's books will include a

a. debit to the Investment account.

b. credit to Retained Earnings.

c. credit to the Investment account.

d. debit to Investment Income or Loss.

____23. Under IFRS, which of the following is a condition for an investment to be classified as current?

a. It must be a cash equivalent.

b. It must be accounted for under the cost model.

c. It is held primarily for trading purposes.

d. It may be held for trading purposes, but could be held for long-term appreciation as well.

____24. Russia Inc. owns bonds that are accounted for under the fair value through net income model. On December 31, 2020, the bonds have a carrying value of $248,700. The fair value at that date is $245,000. The entry to record the year-end adjustment will include a debit to

a. FV-NI Investments.

b. Investment Income or Loss.

c. Unrealized Holding Loss on FV-OCI Investments.

d. Other Comprehensive Income.

____25. If Latvia Inc. acquired a 30% interest in Lithuania Ltd. on January 1, 2020 for $90,000, and during 2020 Lithuania reported net income of $50,000 and paid a total cash dividend of $20,000, applying the equity method would result in an increase (decrease) to Latvia's Investment in Lithuania Ltd. account for 2020 of

a. $50,000.

b. $30,000.

c. $9,000.

d. $(20,000).